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What do you need to know about tax liens and levies?

On Behalf of | Apr 5, 2023 | Tax Law |

Tax liens and levies are legal actions taken by the government to collect unpaid taxes. Although both are used to enforce tax collection, they function differently and result in distinct consequences for taxpayers.

Anyone who’s facing the possibility of these serious collection actions from the Internal Revenue Service should take time to learn about tax liens and levies.

Tax Liens

When a taxpayer fails to pay their taxes, the government may file a Notice of Federal Tax Lien with the county recorder’s office or the appropriate state agency. A lien would then attach to all current and future property owned by the taxpayer until the tax debt is resolved.

Tax liens can significantly affect a taxpayer’s financial situation. The presence of a tax lien can lower credit scores, making it difficult to obtain loans or credit lines. Additionally, tax liens can hinder the sale or refinancing of property, as the government’s claim takes priority over other creditors.

To release a tax lien, the taxpayer must either pay the tax debt in full or make alternative arrangements with the tax agency, such as entering into an installment agreement or negotiating an offer in compromise.

Tax Levies

A tax levy is the actual seizure of a taxpayer’s property, assets or income to satisfy an outstanding tax debt. Levies can take various forms, including wage garnishments, bank account seizures and the taking of real property.

Before a tax levy is imposed, the government must provide the taxpayer with a Notice and Demand for Payment, followed by a Final Notice of Intent to Levy. The taxpayer typically has 30 days from the date of the final notice to either pay the tax debt or make alternative arrangements with the tax agency. If no action is taken, the government can proceed with the levy.

Tax levies can have severe financial consequences for taxpayers, as their assets, income or property may be seized to satisfy the tax debt. This can result in financial hardship, making it difficult for the taxpayer to meet their basic living expenses.

To release a tax levy, the taxpayer must either pay the tax debt in full or work with the tax agency to establish a suitable payment plan or negotiate an alternative resolution. In some cases, the taxpayer may qualify for a levy release due to economic hardship or other extenuating circumstances.

Never ignore notices from the IRS. Addressing collection notices from the IRS before the situation becomes serious enough to warrant a tax lien or levy is usually the best course of action. Seeking legal guidance is also important if the situation has started to spiral.


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