Tax liens and levies are both government collections tools and they are often confused, but they are very different.
A federal tax lien exists after a governmental tax agency puts your balance due on the books (assesses your liability) and/or sends you a bill that explains how much you owe (Notice and Demand for Payment); and you or your business neglect or refuse to fully pay the debt in time.
A tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. A lien generally becomes a matter of public record, and can affect your credit rating and ability to get loans, mortgages, and/or financing.
We can assist in trying to get a lien removed and/or ensure that we take the proper measures that a lien does not turn into a levy as we manage your tax debt.
On the other hand, a levy is the government’s last aggressive act in collecting their tax debt. When a levy is effectuated the government actually takes the property to pay the tax debt. This generally comes in the form of taking monies right out of your bank account. In short, if you don’t pay or make arrangements to settle your tax debt, the IRS, or a State/Local government can levy all your bank accounts and/or seize and sell any type of real or personal property that you own or have an interest in.
If you receive a notice of intent to levy notice from the IRS or another state/local taxing agency, we step in to seek to stop the levy from occurring and help to get the taxing agency’s collection efforts under control, manage the debt, and establish a payment plan or seek an offer in compromise.