What is a federal tax lien?

A lien is a tool that can be used to ensure that a debt is paid. You can think of it as little asterisk or footnote that appears on the title of ownership for a piece of property. If you want to sell certain types of property, a lien can provide a serious obstacle when searching for a willing buyer. The lien acts as a way for the IRS to make sure that if you transfer property and receive compensation in return, that compensation should be set aside and paid directly towards your outstanding balance before you ever see a penny of the proceeds. This acts as a very effective motivation for delinquent taxpayers to take steps to resolve their liabilities.