What’s the Difference Between a Levy and a Lien – IRS?


When it comes to taxes, there is often a lot of confusion surrounding the various terms and processes. In particular, many people don’t understand the difference between a levy and a lien as applied by the IRS. Although these two terms have similar implications for taxpayers, they are very different.

A levy is an action taken by the IRS to seize property or assets to satisfy a tax debt. This includes wages, bank accounts, investments, and other types of income. A levy is usually the result of unpaid taxes that have gone into collections; the IRS will issue notice before taking action. It’s important to note that a levy differs from a lien in that it takes possession of the property, whereas a lien is simply a claim against the assets of a taxpayer.

A lien, on the other hand, is an encumbrance that is placed on property to secure payment of taxes due. This means that if you owe money to the IRS and do not pay it, they can place a lien on your property. This lien will remain until the debt is paid in full, and it serves as a public record that can make it difficult to obtain loans or sell the property.

Now that you understand the difference between a levy and a lien as applied by the IRS, here are some important things to keep in mind:

  1. Paying your taxes is the best way to avoid a levy or lien. If you are unable to pay all of your tax debt at once, contact the IRS and discuss installment payment options.
  2. A levy can be released if you make arrangements with the IRS to pay off your debt or enter into an Installment Agreement. Click here to learn more.
  3. A lien can be released by paying off the tax debt, entering into an Installment Agreement, or posting a bond to cover the amount of taxes due.
  4. If the IRS levies your property, you may be able to get it back if you pay your debt in full or reach an agreement with the IRS.

By understanding the difference between a levy and a lien, you can be better prepared to handle any situation involving the IRS. Doing your research on these tax terms will help you know what actions to take and which ones to avoid when dealing with taxes.

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