Tax Lien Definition

A tax lien gives the IRS the rights to property owned by a person who has failed to pay their taxes on time.

Tax Lien Extended Definition
When a taxpayer neglects or refuses to pay a debt on time, the government can file a tax lien against them. The tax lien secures the IRS’s rights to that person’s property, as well as to property they may purchase in the future. 

A lien protects the government’s interest in the following property types:

• Real estate
• Personal property
• Financial assets

A tax lien is not a levy, so it does not let the government seize a person’s property. However, if a delinquent taxpayer sells their property, the IRS collects the profits as payment. A Notice of Federal Tax Lien filed by the IRS alerts creditors of the tax debt until the lien is lifted.

Related Article
What Is a Business Tax Lien?
Understand a Federal Tax Lien

Last Updated By

Rachel Blakely-Gray | Jun 09, 2023