Yes! Think of a federal tax lien as a type of worst-case scenario—something you want to try and avoid at all costs. If you don’t pay your back taxes, you risk having the IRS aggressively protect its own interests. In plain English, that means it can have an adverse effect on your personal property, your real estate, and even your bank accounts and other financial assets.
But don’t expect the IRS to come knocking at your door to seize your property. Typically, a federal tax lien means that the IRS has first dibs on your property, ahead of other creditors you may have. For example, a federal tax lien would give the IRS priority as a creditor over your credit card debt.