The rapper and producer reportedly owes over $600,000 (£400,000) in unpaid fees.
The Get Low hitmaker, real name Jonathan Smith, was hit with a tax lien amounting to $638,937 (£425,958) last June for his home in the Isle of Palms in South Carolina.
He failed to settle the debt with the Internal Revenue Service (IRS) and the $1.9 million (£1.27 million) mansion was foreclosed in August, reports the Detroit News.
Despite his tax troubles, Lil Jon is set to show off his credentials as a businessman as a contestant on property mogul Donald Trump's Celebrity Apprentice. The new season of the reality show kicks off in March.