Difference Between Lien and Levy

If you fail to pay your taxes or do not make arrangements to settle your debt, the IRS has the power to collect back taxes owed by filing a levy on the your property and assets as a result of a Federal Tax Lien.

A lien is a claim the IRS uses to secure the government’s interest in your property and assets if you fail to pay your tax debt. A levy actually takes the property to pay the tax debt owed.

The IRS can file a levy only after they have met 3 statutory requirements:

    1. The IRS has assessed the tax debt and have sent you a “Notice and Demand for Payment”.
    2. Once you receiving the “Notice and Demand for Payment” notice, you refused to pay the taxes owed.
    3. The IRS has sent a “Final Notice of Intent to Levy and Notice of Your Right to A Hearing”, which is a levy notice, within a minimum of 30 days before the levy.
How Does a Lien Affect You

A tax lien can affect your personal and business life in many ways:

      • Assets : A lien is attached to all of your current assets and any future assets that are acquired during the duration of the lien.
      • Business : Just like your personal assets, a lien also becomes attached to any business properties owned.
      • Credit : A lien will affect your credit rating, making it more difficult to borrow money or obtain a lease. Also hinders your reputation since creditors will be notified that the IRS has claims against you.
      • Bankruptcy : Because bankruptcy is file it does not mean that it will clear your tax debt or lien; future assets could still penalized.
How To Get Rid Of A Lien

The best way to avoid a lien is to file and pay your taxes on time. If you do have a lien filed against you, paying your tax debt in full will be the quickest way for the IRS to release your lien. Once the debt has been paid, the lien will be released within 30 days. If you are unable to pay off your tax debt in full, the IRS offers several forms of tax settlements to help debtors:

Liens and levies are a serious matter and can take away everything you have worked so hard to get. Don’t ignore your tax problems because they will not go away, if you are facing either make sure to contact a tax attorney that can help you settle your tax debt situation.