IRS Tax Liens and Levies Are Rising in 2026. Here’s What Taxpayers Need to Know

If you’ve received an IRS collection notice this year, you’re not imagining things: enforcement activity is increasing, not decreasing. Despite losing more than a quarter of its workforce since early 2025, the IRS is filing more federal tax liens, issuing more levy notices and moving more taxpayers through active collection. That may seem contradictory. How does an agency with tens of thousands fewer employees increase collection activity at the same time?

Much of the answer lies in automation. The IRS has relied on automated collection systems for years, and those systems can continue moving cases forward even when fewer employees are available to answer taxpayer calls, review correspondence or work directly with people trying to resolve their tax debt.

For anyone who owes back taxes to the IRS, that distinction is important. A smaller IRS does not necessarily mean a slower IRS, particularly when it comes to the notices and collection actions that can eventually lead to a federal tax lien or levy.

IRS Tax Lien Filings Have Increased for Three Straight Years

The numbers tell a fairly clear story. The IRS filed 179,019 Notices of Federal Tax Lien in fiscal year 2023. That increased to 196,996 in fiscal year 2024 and again to 214,099 in fiscal year 2025, an increase of approximately 8.7% in a single year. Zoom out further and the trend becomes even more significant: federal tax lien filings have increased roughly 36% since fiscal year 2022.

Some of that increase reflects the IRS returning to more typical enforcement levels after pandemic-era collection activity was substantially reduced. During the 2020 People First Initiative and other pandemic relief efforts, the IRS temporarily suspended or limited a number of collection activities. As those protections ended, collection activity naturally began to rise again.

But describing what we are seeing simply as a “return to normal” misses an important part of the story. The IRS conducting that enforcement today is considerably smaller than it was just a few years ago and increasingly dependent on automated processes. Levy activity has also increased. According to IRS data, the agency requested 339,137 third-party levy notices during fiscal year 2025, up from 305,050 the year before. For taxpayers, however, the numbers themselves are less important than understanding the difference between these two powerful IRS collection tools and recognizing the notices that can precede them.

 

What Is the Difference Between an IRS Tax Lien and an IRS Levy?

A federal tax lien and an IRS levy are related, but they are not the same thing.

A federal tax lien is the government’s legal claim against your property when you fail to pay a tax debt. The IRS may file a Notice of Federal Tax Lien, or NFTL, which publicly establishes its claim and can affect real estate, personal property and business assets. Although federal tax liens have not appeared on the three major consumer credit reports since 2018, an NFTL remains a public record and can complicate selling or refinancing property, obtaining financing and dealing with other creditors.

A levy, by contrast, is an actual seizure of property or rights to property to satisfy a tax debt. Depending on the circumstances, the IRS may be able to levy a bank account, garnish wages or reach other assets after following the required collection procedures.

The IRS generally does not move directly from an unpaid bill to seizing a taxpayer’s assets. Taxpayers typically receive a series of collection notices first and may have important appeal or Collection Due Process rights along the way. That is one reason it is so important not to ignore IRS mail. The earlier a taxpayer addresses a collection problem, the more opportunity there usually is to determine what options are available before enforcement escalates.

 

Why Are IRS Liens and Levies Increasing Despite Staffing Cuts?

A significant portion of IRS collection activity does not depend on a Revenue Officer sitting at a desk and personally deciding what notice to send next. Much of the front end of the collection process is handled through the IRS Automated Collection System, commonly known as ACS.

The ACS has existed for decades and allows the IRS to manage enormous numbers of collection accounts without assigning an individual employee to every case. Depending on the circumstances, a taxpayer with an unpaid balance may receive an initial CP14 balance-due notice followed by additional notices such as the CP501, CP503 and CP504. The CP504, titled “Notice of Intent to Levy,” is a particularly important notice and should never be ignored. It warns that the IRS intends to collect the unpaid balance and may begin looking to other assets for collection. A Notice of Federal Tax Lien may also be filed during the collection process.

The exact sequence and legal significance of IRS notices can vary, and additional notices may be required before the IRS can levy certain property. The important point for taxpayers is much simpler: your collection case can continue moving forward even if you have never spoken with an individual IRS employee. That was true before the recent staffing cuts and it is even more significant now.

 

The IRS Lost More Than 28,000 Employees

Beginning in early 2025, the IRS underwent one of the largest workforce reductions in its modern history. The agency began the year with roughly 102,000 employees and lost more than 28,000 during the year through a combination of voluntary departures, reductions in force and attrition. Those cuts were not limited to customer service representatives. They affected Revenue Agents, Revenue Officers, IRS Criminal Investigation personnel and the technology employees responsible for maintaining and modernizing the agency’s systems. The IRS information technology division alone lost more than 2,600 employees, a reduction of roughly 31%, according to reporting from the National Taxpayer Advocate.

That creates an unusual environment for taxpayers. The systems capable of identifying unpaid balances, generating notices and moving collection cases forward remain in place, while there are fewer people available to answer questions, process correspondence and handle complicated cases that require individualized attention. In practical terms, taxpayers may experience the worst of both worlds: an efficient system for sending collection notices and a less efficient system for helping them resolve the underlying problem.

Is Artificial Intelligence Driving IRS Collection Activity?

Artificial intelligence is becoming part of the IRS’s long-term strategy, but it is important not to confuse AI with the automation already driving much of the collection process.

IRS leadership has discussed using artificial intelligence and other technology to improve efficiency as the agency operates with fewer employees. A Government Accountability Office review released in March 2026 found 126 active AI use cases across the IRS, but 61% of those projects were still in development rather than fully operational.

The GAO also identified a significant problem: the staffing cuts affected some of the same units responsible for developing and supporting the IRS’s AI initiatives. The agency had not fully identified the skills it would need to implement its AI strategy or developed a workforce plan to address those needs.

So, is AI currently responsible for the increase in federal tax liens and levy activity? Probably not. The more immediate explanation is less futuristic. The IRS already had a substantial automated collection infrastructure before the recent workforce reductions. Those systems continue to operate even as the number of employees surrounding them has fallen dramatically. AI may change IRS enforcement in the future, but taxpayers do not need to wait for that future to feel the effects of automation today.

Millions of Americans Owe Back Taxes to the IRS

The scale of IRS collection is larger than many taxpayers realize. Millions of Americans have unpaid federal tax debt, ranging from relatively modest individual balances to extremely large business and high-income taxpayer liabilities.

It is equally important to understand that owing the IRS money does not necessarily mean a taxpayer is refusing to pay. Millions of taxpayers are actively resolving their tax debts through installment agreements and other collection alternatives. At the end of fiscal year 2025, nearly 4.9 million installment agreements were in active inventory. That number illustrates something we have seen throughout our decades working in tax resolution: most people with an IRS problem want to resolve it. They may simply be unable to pay the entire balance at once or may not understand what options are available to them.

That is precisely where a highly automated collection environment can become difficult. An automated system is very good at recognizing that a balance remains unpaid. It is not necessarily capable of understanding why it remains unpaid or what resolution makes sense for that particular taxpayer.

What If You Are Self-Employed or Own a Small Business?

IRS collection problems can be particularly challenging for freelancers, independent contractors and small business owners because taxes are not always withheld automatically from their income.

A W-2 employee generally has federal income and payroll taxes withheld throughout the year. Someone receiving income reported on Form 1099 may instead be responsible for making estimated tax payments. If income changes unexpectedly, expenses increase or estimated payments are missed, the resulting tax bill can be much larger than anticipated. Small business owners may also face additional collection issues involving payroll taxes, including the Trust Fund Recovery Penalty in appropriate cases. The important lesson is not that self-employed taxpayers are necessarily more likely to face aggressive IRS enforcement. It is that tax debt can develop differently when taxes are not being withheld automatically, making early attention to an unexpected balance especially important.

What About IRS Criminal Investigations and Non-Filers?

IRS Criminal Investigation presents a more complicated picture. The division continues to report substantial enforcement activity involving tax crimes, fraud and other financial offenses. At the same time, IRS-CI also experienced staffing losses during the broader workforce reduction. For most taxpayers who simply owe back taxes, however, it is important to distinguish civil tax collection from criminal tax enforcement. Owing the IRS money does not automatically make a tax problem criminal.

Cases involving willful tax evasion, fraud or other potentially criminal conduct are different from the ordinary collection cases involving taxpayers who filed returns but could not pay the resulting balance.

Non-filers deserve particular attention because the circumstances can vary enormously. A taxpayer who has missed several years of returns should not assume the problem will disappear because the IRS is short-staffed. Third-party information reported on Forms W-2 and 1099 gives the IRS significant information about income even when the taxpayer has not filed a return.

If you have unfiled tax returns, addressing them proactively is generally much safer than waiting to see when the IRS will act.

What Should You Do If You Owe the IRS?

If you have an outstanding IRS balance, the practical takeaway from all of this is straightforward: do not assume that staffing shortages will prevent your account from moving through collection. At the same time, receiving an IRS collection notice does not mean that a levy is inevitable or that you have no options. Depending on your financial circumstances and the nature of the tax debt, potential IRS tax resolution options may include an installment agreement, Currently Not Collectible status, an Offer in Compromise or another collection alternative.

An installment agreement allows qualifying taxpayers to pay their tax debt over time rather than all at once.

Currently Not Collectible status may temporarily suspend active collection when a taxpayer cannot pay the IRS while also meeting necessary living expenses. The underlying tax debt does not disappear and interest and penalties may continue to accrue, but this status can provide critical relief for taxpayers experiencing genuine financial hardship.

An Offer in Compromise may allow a qualifying taxpayer to settle a tax debt for less than the full amount owed. Offers are not appropriate for everyone and the IRS considers income, expenses, assets and ability to pay when determining whether an offer should be accepted.

There may be other options depending on the taxpayer, the type of liability, the age of the debt and the taxpayer’s overall financial situation. The right solution depends on the facts of the individual case. That is why simply calling the IRS and agreeing to whatever monthly payment is initially suggested is not always the best approach.

Received an IRS Notice? Do Not Ignore It

One of the most important things a taxpayer can do is respond to an IRS problem before collection activity escalates.Start by reading the notice carefully. Look at the notice number, the amount the IRS says you owe and the tax periods involved. Pay particular attention to any response or appeal deadlines. You should also verify that the IRS balance is correct. IRS notices can involve returns you filed, adjustments made by the IRS, penalties, interest or returns the IRS prepared when you did not file one yourself. Understanding why the balance exists is an important part of determining how to resolve it.

Most importantly, do not assume that you need enough money to pay the entire tax debt before you can do anything about it. Many IRS resolution programs exist specifically because taxpayers cannot always pay their balances in full.

If you are unsure what a notice means or what you should do next, this is also an appropriate time to speak with a qualified tax professional who has experience representing taxpayers before the IRS.

Do You Need a Tax Attorney for an IRS Lien or Levy?

Not necessarily. Taxpayers often search for a “tax attorney” as soon as an IRS problem becomes serious, but attorneys are not the only professionals who may be authorized to represent taxpayers before the IRS. Enrolled Agents, CPAs and attorneys can all have representation rights before the IRS. What matters is whether the professional has the appropriate experience for the problem you are facing.

There are circumstances where a tax attorney may be particularly appropriate, including matters involving potential criminal exposure, litigation or legal issues that require an attorney’s expertise. Many civil IRS collection matters, however, can be handled by an experienced tax professional who specializes in tax controversy and IRS representation.

The better question is not simply, “Do I need a tax attorney?” It is, “Who has the right experience to handle my tax problem?”

The Bottom Line

The IRS of 2026 is smaller than it was just a few years ago, but its collection machinery has not disappeared with its employees. Federal tax lien filings have increased for three consecutive years, levy activity is rising and longstanding automated systems continue moving collection cases forward. At the same time, taxpayers may have a harder time reaching the people they need when a case requires individual attention. That combination makes early action particularly important. If you receive an IRS collection notice, do not wait for the agency to personally call you or assign someone to your case before taking it seriously. Understanding the notice, your deadlines and your resolution options early in the process can make an enormous difference.

Tax Crisis Institute has been helping individuals and businesses resolve IRS and state tax problems since 1983. If you have received a collection notice, are worried about an IRS tax lien or levy, have unfiled tax returns or simply do not know what to do next, give us a call.

Tell us what is going on. We will help you understand your options and point you in the right direction, even if that direction is not our family business.

This article is intended for general informational purposes and does not constitute legal or tax advice. Every taxpayer’s circumstances are different and available resolution options depend on the specific facts of the case.