A federal tax lien is a legal claim the IRS places on a taxpayer’s property when they fail to pay their tax debt. The lien gives the IRS the right to claim assets—including real estate, vehicles, and financial accounts—as collateral until the debt is paid off. A lien does not result in the immediate seizure of assets but does affect a taxpayer’s ability to sell or transfer property.
The IRS typically files a Notice of Federal Tax Lien, which becomes a public record and may affect the taxpayer’s credit score, making it more difficult to secure loans or sell property. The lien will remain in place until the tax debt is paid in full or resolved through another arrangement, such as an Offer in Compromise.
To remove a lien, taxpayers can:
- Pay the full amount of the tax debt.
- Enter into a payment plan (Installment Agreement).
- Request a Lien Withdrawal if the debt is resolved or if the lien was filed in error.
Acting quickly to resolve the underlying tax debt can help avoid the negative consequences of a federal tax lien.