Does buying a property at a municipal tax sale wipe out existing mortgages and liens registered against it?

Generally, yes - a completed municipal tax sale is intended to convey title to the successful purchaser largely free of prior mortgages, liens, and most other financial claims that had been registered against the property, since the whole point of the process is to let the municipality recover unpaid taxes ahead of other creditors and pass on clean title as an incentive to buyers. This is one of the real advantages of a tax sale compared with an ordinary distressed purchase, where existing financial encumbrances have to be separately paid out or discharged at closing.

That said, "generally" is doing real work in that sentence - the tax sale process does not necessarily extinguish every category of interest registered against a property, and some kinds of claims are treated differently than an ordinary mortgage or judgment lien (a related question covers easements and restrictive covenants specifically). The exact effect on a given property depends on what is actually registered against title and how the sale was conducted.

Because of that nuance, have a lawyer review the property's full title history before you bid, rather than assuming every registered interest simply disappears.