A Notice of Federal Tax Lien (NFTL) is a public document filed by the IRS that notifies creditors of the IRS’s legal claim to a taxpayer’s property due to unpaid tax debt. The lien attaches to all of the taxpayer’s current and future property, including real estate, personal property, and financial assets.
An NFTL can affect a taxpayer’s:
- Credit score.
- Ability to sell or refinance property.
- Ability to obtain loans.
The IRS files an NFTL after sending the taxpayer multiple notices and demands for payment. Once the lien is in place, it remains until the tax debt is paid in full or the IRS agrees to remove it through a lien release or lien withdrawal.
Taxpayers can remove an NFTL by:
- Paying the full amount owed.
- Entering into an Installment Agreement or Offer in Compromise.
- Requesting a Lien Withdrawal if the lien was filed in error.
Addressing a tax lien promptly is important to avoid further financial complications and protect the taxpayer’s assets.