The IRS (Internal Revenue Service) files a Notice of Federal Tax Lien (NFTL) when a person owes at least $10,000 in unpaid taxes and neglects to pay or make payment arrangements with the IRS. The NFTL serves as a public notice that the government has a legal claim against the taxpayer’s property and assets, and can affect the taxpayer’s credit rating and ability to obtain credit.
However, it is important to note that the IRS may also file an NFTL in some cases where the taxpayer owes less than $10,000, such as when the taxpayer has a history of noncompliance or when the IRS determines that it is necessary to protect the government’s interests.