What is a federal tax lien?

What is a tax lien? A tax lien is a legal claim against your current and future property as security for an outstanding tax liability. A statutory lien provided by IRC § 6321 is created when the following occurs:

1. An assessment must have been made (a tax balance is due)
2. The IRS must issue a notice and demand for payment on the outstanding balance due
3. The taxpayer must have neglected or refused to pay

A statutory notice exists prior to filing a Notice of Federal Tax Lien (NFTL). Once the NFTL is filed with the County Recorder’s Office, it provides public notice to creditors and is filed to establish priority of the IRS claim versus the claims of other creditors.