IRS tax liens can be a 'kiss of death,' consumer advocate says — and they're on the rise

There has been an uptick in the number of tax liens filed by the Internal Revenue Service in recent years, exposing more people who owe a federal tax debt to potential job loss, the inability to secure loans and other downstream financial impacts.

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

The upward trend is largely due to a resumption in more normal tax collections following a temporary suspension of enforcement activity during the Covid-19 pandemic, according to tax experts and IRS officials.

But it comes at a time when households are struggling with affordability issues after years of above-target inflation, and amid deep cuts to IRS staff overseen by the Trump administration — leading some observers to question whether the agency will rely more heavily on automated lien filings to compensate for reduced manpower.

Taxpayer advocates also said they were generally concerned by the uptick given the potential negative repercussions of a lien for households.

"It's just a kiss of death for a lot of things," said Nina Olson, the executive director of the Center for Taxpayer Rights, who formerly served as the IRS' National Taxpayer Advocate.

A tax lien is the government's legal claim against a taxpayer's property — such as real estate and financial assets — when they don't pay a tax debt.

It's one of the IRS' enforcement mechanisms, among others like tax refund "offsets," and garnishing a person's wages, for example.

Lien filings are public, and notify potential lenders that the IRS has a priority claim on the taxpayer's debts, Olson said. That can make it difficult for the taxpayer to access new credit — perhaps via a mortgage or refinancing a home, or for an entrepreneur to get a revolving line of credit, for example, Olson said.

"All finance stops," Olson said. "What lender will say, 'I'll be in line after the IRS?"

Beyond the IRS staking a claim to a taxpayer's assets — including their business assets — employers may also pass on a job applicant if they find a lien during a background check, experts said.

A lien may trigger workers to get fired from their jobs if they work in certain industries, such as government, for those with certain security clearances, or finance, said Keith Fogg, who founded the Tax Litigation Clinic at Harvard University and worked for more than three decades in the IRS Office of Chief Counsel.

"The lien has strong implications for some people," Fogg said. "It has collateral consequences."

While some households may have tax debts due to willful negligence, others may accrue large unpaid balances for innocent reasons and don't have the money to repay, experts said.

For example, low-income families might claim the child tax credit and earned income tax credit, but ultimately need to pay back thousands of dollars if the IRS later deems they weren't eligible for the tax breaks — such as if the children lived with a parent for five months out of the year instead of 6½, Fogg said.

Additionally, freelancers and contractors may end up owing significant tax debts come tax season since they don't have an employer withholding income taxes on their behalf — a dynamic that has become more prevalent amid a growing "gig" economy, Fogg said.

Of course, the total number of annual federal lien filings by the IRS in the 2025 fiscal year is still about half the roughly 400,000 to 500,000 typical in the years before the pandemic, according to agency data.

"Internal Revenue Service enforcement continues to return to pre-Covid 19 levels after collection activities were significantly reduced during and after the pandemic," according to an e-mailed statement from an IRS spokesperson.

However, even as those lien filings ramp up, the IRS has a significantly smaller workforce, including from cuts made by the so-called Department of Government Efficiency, or DOGE.

The agency employed 74,000 people at the beginning of the 2026 tax-filing season, a 27% reduction from the 102,000 employees a year earlier, Erin Collins, the National Taxpayer Advocate, wrote in a report to Congress last month.

Trump administration officials had previously indicated a goal of reducing IRS headcount to about 50,000 employees, a staffing level not seen since the 1960s, the Yale University Budget Lab said in an April report.

Olson said she fears reduced staffing may lead the IRS to rely more on automated lien filings if the agency doesn't have enough employees to conduct the discretionary vetting of specific taxpayer circumstances.

"As we see lien filing increase out of the Covid aftermath, we have fewer employees in collection and fewer experienced management and supervisors to be able to look at this and make these discretionary decisions," Olson said.

Going back to 1980, an IRS revenue officer used to make a "personal" and "thoughtful" decision on every lien filing, Fogg said.

Now, the IRS generally files such liens automatically once a person's tax debt exceeds $10,000, Olson said. Lower amounts would generally take the approval of a manager to file a lien. The threshold for an automatic lien filing used to be lower, at $5,000, but was increased in 2011.

While serving as National Taxpayer Advocate from 2001 to 2019, Olson said she found that automatic lien filing can harm taxpayers' ability to pay the current tax debt, increases their risk of incurring additional tax debts and decreases their earning capacity.

The IRS didn't directly answer a question as to whether it would lean more an automated lien filings.

"Automated enforcement activity is a carefully managed process and helps ensure the IRS has sufficient resources to respond to taxpayer inquiries, process appeals, and provide appropriate customer service," the IRS spokesperson said in an e-mail.

The agency sends "multiple notices" informing taxpayers of their balance due, the options available for resolution and their collection due process rights before filing a notice of federal tax lien, they said.

"Taxpayer rights remain a central consideration throughout the collection process," the spokesperson said.

Fogg said he thinks it's unlikely the IRS will reduce the dollar threshold to file an automatic lien.

Part of the calculus is rate of return — and it can ultimately prove costly and administratively cumbersome for the IRS in certain cases, such as if a taxpayer pushes back on the lien and seeks to get it discharged, Fogg said.

"Just because they file a lien doesn't mean they'll get the money," he said.