IRS lien filings rise 36% as advocates warn of credit and job risks

The Internal Revenue Service filed more than 214,000 notices of federal tax liens in fiscal 2025, up 9% from the previous year and 36% from fiscal 2022, according to IRS data published in June. The increase marks a return toward more typical tax collection activity after pandemic-era enforcement pauses, while raising concerns among taxpayer advocates about the effect on household credit, employment and access to capital.

A federal tax lien is the government’s legal claim on a taxpayer’s property when a tax debt is unpaid. The claim can attach to assets such as real estate, financial accounts and business property, and it signals to other creditors that the federal government has a priority interest in the taxpayer’s assets.

The IRS said in an emailed statement that enforcement activity continues to move back toward pre-Covid-19 levels after collection work was reduced during and after the pandemic. Agency data show lien filings remain well below the roughly 400,000 to 500,000 annual filings that were typical before the pandemic.

Credit and employment effects

Taxpayer advocates said liens can create consequences beyond the tax bill itself. Nina Olson, executive director of the Center for Taxpayer Rights and a former National Taxpayer Advocate, said lien notices are public and can affect a taxpayer’s ability to obtain credit. She described the lien as “just a kiss of death for a lot of things.”

Olson said lenders may be reluctant to extend credit, such as a mortgage, refinancing or a business line of credit, if the IRS already has a senior claim. Keith Fogg, founder of the Tax Litigation Clinic at Harvard University and a former IRS Office of Chief Counsel lawyer, said liens can also affect employment in fields such as government, finance or roles involving security clearances.

Tax liens are one of several collection tools available to the IRS. Others include applying tax refunds to outstanding debts and garnishing wages. A lien does not itself seize property, but it preserves the government’s claim and can complicate transactions involving assets that are subject to that claim.

Fogg said some tax debts arise from willful nonpayment, while others can result from mistakes or later IRS determinations. He cited low-income families who may have to repay benefits such as the child tax credit or earned income tax credit if the IRS later decides they were not eligible. He also said freelancers and contractors can accumulate large balances because employers are not withholding income taxes for them.

Staff cuts and automated filings

The increase in lien filings comes as the IRS workforce has declined. Erin Collins, the National Taxpayer Advocate, told Congress in a report last month that the agency 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 indicated a goal of reducing IRS staffing to about 50,000 employees, a level not seen since the 1960s.

Olson said reduced staffing could lead the IRS to depend more on automated lien filings rather than case-by-case judgment. She said the agency generally files liens automatically when a tax debt exceeds $10,000, while lower amounts usually require managerial approval. The automatic threshold had been $5,000 before it was raised in 2011.

The IRS did not directly say whether it would rely more on automated lien filings. An IRS spokesperson said automated enforcement is “a carefully managed process” and helps the agency preserve resources for taxpayer inquiries, appeals and customer service. The spokesperson said the agency sends multiple notices before filing a lien and informs taxpayers of payment options and collection due process rights.

Fogg said he does not expect the IRS to lower the automatic filing threshold. He said the agency must weigh costs and returns, because a lien can require additional administrative work if a taxpayer contests it or seeks a discharge.

This story draws on original reporting from CNBC.