A tax lien is a legal claim the government places on your property when you owe unpaid taxes

When you do not pay federal, state, or local income taxes, property taxes, or other taxes owed, the government can file a tax lien against you. This is a public legal notice that says the government has a right to your property or assets to collect what you owe. The lien does not take your property immediately — it is a claim that sits on your record and makes it hard to sell, refinance, or borrow against that property until the debt is paid.

A tax lien is different from a tax levy. A lien is a claim; a levy is when the government actually seizes your property, wages, or bank account to pay the debt. The lien comes first and gives you time to pay. If you ignore it, a levy can follow.

Tax liens are filed by the IRS (for federal taxes), your state tax authority, or your county or city (for property taxes or local income taxes). Once filed, the lien appears on your credit report and in public property records, which means lenders, landlords, and buyers can see it.

Key Takeaways

  • A tax lien is a government claim on your property that secures the debt you owe, and it appears in public records and on your credit report.
  • The lien does not seize your property but prevents you from selling or refinancing without paying the tax debt first.
  • Federal tax liens are filed by the IRS, while state and local liens are filed by your state or county tax authority.
  • Paying the full debt, setting up a payment plan, or filing an appeal can remove or reduce the impact of a tax lien.

How a tax lien affects your ability to sell or borrow

Once a tax lien is filed against you, any property you own — a house, car, or business — becomes collateral for the debt. If you try to sell the property, the sale cannot close until the tax debt is paid off. The buyer's lender will not fund the purchase, and the title company will not transfer ownership, because the lien holder (the government) has a legal right to the proceeds.

The same problem occurs if you want to refinance a mortgage or take out a home equity loan. Lenders will not lend against property that has a lien on it, because the government's claim comes before theirs. You cannot remove the lien by refinancing — you have to pay the tax debt first.

A tax lien also damages your credit score. It appears as a public record and signals to creditors that you have not paid a government debt. This makes it harder to get approved for credit cards, car loans, or other borrowing, and if you are approved, the interest rate will be higher.

The difference between federal, state, and local tax liens

The IRS files federal tax liens when you owe income tax to the federal government. These are filed in the county where you live or own property and appear in national databases that lenders and credit bureaus can access. A federal lien can attach to all your property — real estate, vehicles, bank accounts, and future income.

State tax liens are filed by your state's tax authority (often called the Department of Revenue) when you owe state income tax or other state taxes. These are filed in your state's records and work the same way as federal liens — they attach to your property and prevent sale or refinancing.

Local tax liens are filed by your county or city, usually for unpaid property taxes or local income taxes. Property tax liens are the most common type of local lien. These are filed in the county recorder's office and appear on the property deed itself. If property taxes go unpaid long enough, the county can foreclose on the property and sell it at auction to recover the debt.

When the government files a tax lien

The IRS does not file a federal tax lien immediately after you miss a payment. You typically receive a Notice and Demand for Payment (also called a bill) when taxes are first due. If you do not pay within 10 days, the IRS can file a lien, though in practice they usually wait longer and send additional notices.

Before filing a lien, the IRS will send you a Notice of Federal Tax Lien Filing at least 5 days before the lien is filed (though this notice sometimes arrives after the lien is already filed). This notice tells you the amount owed, the tax year, and your right to appeal.

State and local tax authorities have their own timelines. Some file liens quickly after taxes are due; others wait 30 to 90 days and send multiple notices first. Property tax liens often move faster — if property taxes are unpaid for a year or more, the county may file a lien and eventually foreclose.

How to remove or reduce a tax lien

The most direct way to remove a tax lien is to pay the full amount owed. Once you pay, you can request a Certificate of Release of Federal Tax Lien from the IRS (or the equivalent from your state or county). The IRS will release the lien within 30 days of payment. The lien will also drop off your credit report within a few months, though the payment history remains.

If you cannot pay the full amount, you may be able to set up a payment plan (called an installment agreement with the IRS). While you are making regular payments under an approved plan, the IRS may withdraw the lien or agree not to file one. This is called lien withdrawal, and it removes the public notice even though you still owe the debt. You must stay current on the plan — missing a payment can cause the lien to be refiled.

You can also file an appeal or request a Collection Due Process hearing if you believe the lien was filed in error or if you have a hardship. The IRS has procedures for this, and you must act within the timeframe given in the notice. An appeal does not erase the debt, but it can delay collection or result in a different payment arrangement.

For property tax liens, some counties offer tax lien redemption — a period (usually one to three years) during which you can pay the back taxes plus interest and penalties to stop a foreclosure. The exact process and timeline vary by state and county.

What happens if you ignore a tax lien

Ignoring a tax lien does not make it go away. The debt continues to grow with interest and penalties. The lien remains on your property and in public records, blocking any sale or refinancing.

If you do not address the lien, the government can move to a tax levy, which means they actually seize your property, wages, or bank account. The IRS can garnish your wages (take a portion of each paycheck), levy your bank account, or seize and sell your car or other assets. A levy is much more disruptive than a lien and happens without a court order.

For property taxes, ignoring a lien can lead to foreclosure. The county will sell your property at a tax sale to recover the debt. You may have a redemption period to pay before the sale, but if you do not, you can lose the property entirely.

How long a tax lien stays on your record

A federal tax lien stays in place until the debt is paid or until the statute of limitations expires. The IRS has 10 years from the date the tax is assessed to collect the debt (this is called the collection statute of limitations). After 10 years, the IRS must stop collection efforts and the lien expires.

However, the 10-year clock can be paused or restarted in certain situations — for example, if you file for bankruptcy, the clock stops during the bankruptcy and for six months after. If you live outside the United States, the clock also stops.

Even after the lien expires, it may remain on your credit report for up to seven years from the date it was filed. You can request that the IRS remove it from your credit report once it expires, but you may need to follow up in writing.

State and local tax liens follow their own timelines, which vary by state. Some expire after 10 years; others last longer or can be renewed. Property tax liens typically expire after the redemption period ends and the property is sold, but the exact rules depend on your state and county.

Frequently Asked Questions

Can I sell my house if there is a tax lien on it?

You cannot sell without paying off the lien first. The title company will not close the sale, and the buyer's lender will not fund the purchase. The tax debt must be paid from the sale proceeds before you receive any money. If the sale price is less than what you owe in taxes, you will still owe the difference after the sale.

Does a tax lien mean the government owns my property?

No. A lien is a claim, not ownership. You still own the property and can live in it or rent it out. The lien just means the government has a legal right to the property or its sale proceeds if you do not pay the debt. If the debt goes unpaid long enough, the government can move to seize or sell the property, but a lien alone does not transfer ownership.

What is the difference between a tax lien and a tax levy?

A lien is a claim filed in public records; a levy is when the government actually takes your money or property. A lien comes first and gives you time to pay. If you ignore the lien, the government can issue a levy to seize your wages, bank account, or assets without going to court.

Can I get a mortgage if I have a tax lien?

Most lenders will not approve a mortgage while a tax lien is active. Some specialized lenders may work with you if you have a payment plan in place with the IRS and are making regular payments, but interest rates will be much higher. The easiest path is to resolve the lien before applying for a mortgage.

How do I know if a tax lien has been filed against me?

You will receive a notice from the IRS, your state, or your county. You can also search for liens in your county recorder's office (usually online) or request a transcript from the IRS showing your account balance and any liens. If you suspect a lien but have not received notice, contact the tax authority directly to ask about your account.