Tax lien and the tax levy are two different tools used by the IRS to collect your tax debts.
On several occasions we have warned about the power of the IRS to impose liens on your home, bank accounts, and other assets if you don’t pay your taxes.
What’s more, the IRS can take your assets with a garnishment order to satisfy any tax debt you allegedly have with them.
In this article, we will explain the main differences between a tax lien and a tax levy, and give you some recommendations on what to do.
Notice of Federal Tax Lien
If the IRS thinks you owe them money, it will send you a Notice and Demand For Payment.
If you receive this letter, it is in your best interests to act immediately.
Either you pay your tax debt or appeal the amount you owe.
Whatever you do, you should not ignore this notification.
If you do, the IRS will likely file a Notice of Federal Tax Lien, alerting your creditors (and other parties) that they have a legal claim on certain assets of yours.
A lien, generally speaking, attaches to an asset and receives priority if the asset is sold.
One of the most common examples of a lien (aside from the tax context) is a mortgage.
Your home will not be automatically confiscated if you default on your mortgage loan.
But, if a lender forecloses the property for non-payment, the lien holder receives the proceeds of the sale before you.
Final Notice of Intent to Levy
Tax lien and levy occur at different stages of the tax collection process.
Generally, the IRS first places a lien on a taxpayer’s property if the taxpayer refuses to pay the amount owed.
The IRS can pursue a levy if the lien does not bind the taxpayer. Thus they will seize certain assets belonging to the taxpayer.
A levy allows the IRS to seize certain property and assets. As well as selling them and using the proceeds to satisfy the tax debt of an American citizen.
Before collecting your assets, the IRS must send you the Final Notice of Intent to Garnish 30 days before.
With a garnishment, the government can confiscate funds from your bank account, garnish your wages, or sell certain properties.
You need the help of Global Tax
Your rights don’t go away just because you owe money to the IRS.
Depending on your situation, there may be a good chance of successfully appealing your lien or levy.
Timing is important, you must act soon!
If you have a tax levy or a tax lien, contact us by calling (703) 533 – 3636.