IRS tax lien filings rise as collections return from pandemic lows

Federal tax liens are climbing again, and that can hit a household far beyond the tax bill itself. For anyone trying to borrow, refinance, start a business or pass a background check, an IRS lien can turn an unpaid tax balance into a broader financial problem.

The IRS filed more than 214,000 notices of federal tax liens in fiscal 2025, which ended Sept. 30, according to agency data published in June. That was up 9% from the prior year and 36% higher than in fiscal 2022.

A federal tax lien is the government’s legal claim against a taxpayer’s property when a tax debt goes unpaid. The claim can attach to real estate, financial assets and business assets, according to the IRS.

Why liens are rising

Tax experts and IRS officials attributed much of the increase to the return of more typical collections work after the Covid-19 pandemic, when the agency temporarily pulled back on certain enforcement activity.

An IRS spokesperson said in an emailed statement that enforcement is continuing to move back toward pre-Covid levels after collection activity was reduced during and after the pandemic.

Even with the recent rise, lien filings remain well below the years before the pandemic. IRS data show annual federal lien filings were typically around 400,000 to 500,000 before Covid, roughly twice the fiscal 2025 level.

The rebound is landing at a sensitive time for many taxpayers. Households have been dealing with affordability pressure after years of above-target inflation, while the IRS has also gone through large staffing cuts under the Trump administration.

Erin Collins, the National Taxpayer Advocate, told Congress in a report last month that the IRS had 74,000 employees at the start of the 2026 filing season, down 27% from 102,000 a year earlier. The Yale University Budget Lab said in an April report that Trump administration officials had previously discussed reducing IRS headcount to about 50,000, a level it said had not been seen since the 1960s.

The fallout for taxpayers

Nina Olson, executive director of the Center for Taxpayer Rights and a former IRS National Taxpayer Advocate, described tax liens as a “kiss of death” for many financial activities.

Because lien notices are public, they alert lenders that the IRS has a claim ahead of other creditors, Olson said. That can make it harder for a taxpayer to get a mortgage, refinance a home or obtain a business line of credit.

Keith Fogg, founder of the Tax Litigation Clinic at Harvard University and a former longtime attorney in the IRS Office of Chief Counsel, said liens can also affect employment. Employers may view a lien negatively in a background check, and the consequences can be more serious for people in government, finance or jobs tied to security clearances, he said.

Experts said taxpayers can end up with IRS debts for different reasons. Fogg cited low-income families who may have to repay credits if the IRS later decides they did not qualify, as well as freelancers and contractors who may owe at tax time because no employer withheld income taxes from their pay.

Automation questions

Olson said she is concerned that a smaller IRS workforce could mean more reliance on automated lien filings, rather than case-by-case judgment by collection staff.

According to Olson, the IRS generally files liens automatically once a tax debt exceeds $10,000, while smaller balances usually need manager approval. The automatic threshold was $5,000 before it was raised in 2011.

The IRS did not directly say whether it would rely more on automated lien filings. A spokesperson said automated enforcement is “carefully managed” and that the agency sends multiple notices about balances, resolution options and collection due process rights before filing a lien notice.

Fogg said he thinks the IRS is unlikely to lower the automatic filing threshold, partly because liens can be costly and time-consuming when taxpayers challenge them or seek discharge. Filing a lien does not guarantee the IRS will collect, he said.

This story draws on original reporting from CNBC.