A Federal Tax Lien (FTL) is created by statute and attaches to a taxpayer’s property and rights to property for the amount of the liability Per IRM 22.214.171.124. A tax lien is directly reported on your credit report and can hinder one’s ability to apply for loans or purchase of any future property. The determination of the filing of a federal tax lien is made within ten days of a taxpayer being notified of the tax debt. The notice of taxpayer contact is generally made with the Letter CP 501 or 504. Normally, a tax lien is filed with the Final notice of Intent of levy (L-1058) which allows the taxpayer thirty days to appeal the filing of tax lien or future levy action on the account.
Generally, the IRS determines that the current tax debt is owed by the taxpayer and all the necessary procedures have been filed by the IRS to file the federal tax lien. The IRS will not always file a tax lien within the initial 10 day contact but the filing of tax lien is priority before the issuance of the Notice of Levy per IRM 126.96.36.199.1. The filing of a tax lien is also one of the last resorts for the IRS because the taxpayer has failed to resolve the unpaid debt with the IRS.