Liens and Levies

The Difference Between a Lien and a Levy

The simple difference between a Lien and a Levy is their effect on the property you own. A Lien is a claim registered against property for not paying taxes. It does not take away a taxpayer's property or the right to sell or transfer ownership of the property.

A Levy comes after a Lien has been filed. A Levy happens because the taxpayer fails to satisfy the Lien within a certain period of time. A Levy is a seizure, it takes your property and transfers ownership to the government.

Tax Lien Details
A tax Lien is one of the IRS's (and DOR'S) "enforced collections" actions where it takes aggressive steps to collect on its tax debt. Specifically, a Lien is a public notification that the IRS / DOR claims you owe them money and they have a legal claim against your property.

The IRS / DOR will send a notice of its intent to file a Lien against your property to your last known address and to your local government recorder's office. Your goal should be preventing the lien from occurring, not trying remove one after it's in place.

Once a lien is in effect, it has several negative consequences. First, the lien will likely be recorded by the major credit reporting agencies and serve as a public notice that the IRS believes you owe them money.

Secondly, another major consequence of a tax Lien is that if you sell the property that has a Lien filed against it, the IRS will automatically take the amount it thinks it is owed before you receive any money from the sale.

Tax Levy Details

An IRS / DOR levy can be issued on virtually any of your assets, including your money as well as any of your possessions that can be resold to pay your tax debt.

Three Types of Levies

With a Levy, the IRS / DOR can seize your property (including a portion of your wages) and your bank account could be frozen up to the amount of the levy for 21 days. You can challenge the Levy, but if unsuccessful, the funds are automatically given to the IRS / DOR. If this does not work, they will garnish your wages (see Wage Garnishment).

Once the IRS / DOR removes funds from your bank account, garnishes your wages, or seizes your home, your car or other valuable items, it is virtually impossible to get those assets back.

However, one general statement can be made about all IRS / DOR Levies, it is a clear indication that they believe you owe them a substantial amount of money, and think they have very little chance of collecting the tax debt through less aggressive means. If you have not yet consulted with a tax attorney, you should-immediately!

The IRS will not be deterred and they won't disappear. Call us for a FREE CONSULTATION and let's discuss all YOUR options in ending your tax problems.