How The IRS Decides When Tax Liens Arise

The Internal Revenue Code (IRC) governs when and how a federal tax lien arises.  The federal tax lien—sometimes referred to as a “statutory lien” or “silent lien”—is often confused with the notice of the lien’s existence, which is generally filed by the IRS at a later date (i.e. a Notice of Federal Tax Lien or NFTL).

A Notice of Federal Tax Lien is a document that is publicly filed with state and local jurisdictions in order to put other creditors on notice of the IRS’s lien interest.  As a result, the NFTL itself does not actually create the lien—it merely informs others of a lien that already exists by statute.  However, the date of the NFTL filing is important for determining the IRS’s priority against other creditors.

Tax liens are one of the primary tools that the IRS uses to collect outstanding taxes.  The IRS also uses the levy process or seizures to collect taxes where available.  See our separate post on IRS Seizures: The Good, the Bad, and The Ugly for more on topics related to levies and seizures.

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