Notice of Federal Tax Lien (NFTL)
A Notice of Federal Tax Lien (NFTL) is a legal claim issued by the Internal Revenue Service (IRS) against a taxpayer’s property when they fail to pay a tax debt. The NFTL serves to protect the government’s interest in the taxpayer’s assets, effectively notifying creditors that the IRS has a lien on the property, which can include real estate, personal property, and financial accounts.
When the IRS files an NFTL, it becomes a public record, which can impact the taxpayer’s creditworthiness and ability to secure loans. The lien remains in effect until the tax debt is paid in full, the lien is released, or the statute of limitations expires.
For example, if an individual owes $10,000 in unpaid income taxes and the IRS files an NFTL, any subsequent creditors will be aware of the IRS’s claim to the individual’s assets, potentially complicating financial transactions or sales of property.
« Back to Glossary Index