How do tax liens differ from tax levies?

One of the things a person with a tax debt can find themselves facing is a tax lien from the Internal Revenue Service. It is important to not confuse liens with one of the other types of tax collection mechanisms the IRS has, levies.

An IRS levy is a tax-related seizure of a property, so it takes a person’s property from them.

A federal tax lien, on the other hand, is a tax-related legal claim placed on property. So, it doesn’t remove the property from the owner, but rather is a notifier that the federal government has a claim on the property.

The fact that a tax lien doesn’t take property from the taxpayer doesn’t mean that a tax lien isn’t an impactful thing. Having a tax lien on one’s property can have a range of implications for a person, including business implications, credit implications and implications regarding what they can do with the property.

Liens and levies also differ in what sorts of options a person might have for responding to them and what sorts of processes can be involved in addressing them.

As this discussion underscores, when a person is facing a tax debt, what specific tax collection methods have been leveled against them can have implications on what the best way for them to proceed would be. Experienced tax lawyers can give individuals who have been assessed a tax debt by the IRS and have had tax debt collection mechanisms employed against them explanations of their situation and the mechanisms that are being used and provide them with guidance on what avenues they might be able to pursue for resolving the situation.

Source: Internal Revenue Service, “Understanding a Federal Tax Lien” Accessed May 4, 2016