Tax lien notice, often used in the context of federal tax, refers to a document released by Internal Revenue Service (IRS) in public records to notify a taxpayer that they risk losing their assets and alert creditors that the IRS has a claim against the taxpayer’s assets. Since the filing of a tax lien notice is in public record, credit reporting agencies may obtain the filing and show it on the taxpayer’s credit report, thus harming the taxpayer’s credit score. The IRS will withdraw a tax lien notice if the notice was not filed according to IRS procedures or the taxpayer has entered into an installment agreement to satisfy the liability.
The tax departments of states can also issue tax liens. In California, for example, the Franchise Tax Board can file a Notice of State Tax Lien against a taxpayer if the taxpayer failed to respond or pay in full her tax debts. The Notice of State Tax Lien can be recorded with one or more local county recorders.
[Last updated in October of 2021 by the Wex Definitions Team]