Federal Tax Lien
A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. A federal tax lien exists after the IRS:
- Puts your balance due on the books (assesses your liability);
- Sends you a bill that explains how much you owe (Notice and Demand for Payment); and
- You neglect or refuse to fully pay the debt in time.
The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.
More from H&R Block:
If you don’t pay a tax debt that meets lien-filing criteria, the IRS files a tax lien to secure the government’s legal claim to your property and your rights to property.
A lien filing doesn’t mean that the IRS will seize your property. It just makes sure that the IRS will get the first rights to your property over other creditors.
A federal tax lien has several negative effects:
- Affects your access to credit
- Affects your ability to get a loan
- Affects your ability to sell or transfer property
Normally, the IRS tries to collect back taxes before it files a federal tax lien. The IRS will send a series of notices, and if you don’t pay, the IRS may file a lien. But the IRS doesn’t have to send multiple notices before it files a lien. The law requires only that the IRS make a tax assessment and demand payment. At that point, if the taxpayer refuses or doesn’t pay, the IRS can file a lien.
If you owe more than $10,000 and you’re not in an arrangement to pay all the taxes you owe within 6 years, the IRS will generally file a tax lien. If you owe more than $50,000, the IRS will almost always file a tax lien, regardless of whether you’re in an agreement to pay.
There are several options to avoid a federal tax lien.
The first is obvious: Pay the tax, penalties, and interest in full.
The second is to get into an installment agreement that doesn’t require the IRS to file a lien.
Get help from an IRS expert
H&R Block’s experts can solve any IRS problem, no matter how complex.
Learn about the different options when you can't pay or still owe money from a past return from the tax experts at H&R Block.
Liens and levies are tools the IRS uses to collect back taxes. Learn more about each one -- and how to avoid tax liens and levies by working with the IRS.
Learn what to do when you can’t pay your taxes – to avoid these 10 consequences of tax debt. Get the facts from the tax experts at H&R Block.
You have options when you owe taxes. Get the facts about the best way to pay your tax bill with help from the experts at H&R Block.
Seriously delinquent tax debt can cause your passport to be restricted. Find out if you could be impacted and learn how to fix the problem.