What is the outcome when a federal tax lien attaches to a tenancy by the entirety?

When a federal tax lien attaches to a tenancy by the entirety, it specifically affects only the interest of the spouse against whom the lien is enforced. In the case of tenancies by the entirety, which is a form of joint ownership available only to married couples, each spouse has an equal and undivided interest in the property. However, one of the key features of this ownership type is that the interest of one spouse is not subject to the claims of creditors of the other spouse.

Thus, if a federal tax lien is imposed on one spouse due to unresolved tax obligations, it can only attach to that spouse’s share of the property. The property itself cannot be seized to satisfy a debt of just one spouse because the entire interest belongs to both. Therefore, the lien will affect the rights of the debtor spouse but does not give the creditor rights over the entire property unless both parties were liable. Consequently, the other spouse's interest remains protected, maintaining the integrity of the entire tenancy.

This principle upholds the protections offered in a tenancy by the entirety, emphasizing that while a lien can impact the executing spouse, it does not change the nature of the joint ownership unless both spouses are involved in the debt liability.