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You may read about IRS tax liens and IRS tax levies, but not understand what the difference is. Both a tax lien and a tax levy are considered part of the enforced collection process. These methods of collecting your unpaid tax bill are used after you have not voluntarily paid, or agreed to pay, your back taxes.
Tax lien. A tax lien is the first step in the IRS enforced collection process. The purpose of the tax lien is to stake a claim against any of your assets. By filing the Notice of Tax Lien in your county's public records system, anyone interested has notice that the state or federal government has a claim against your assets. The filing gives the taxing authority priority over other creditors, in most cases.
In short, a tax lien is a claim against your property. You need to pay off the tax lien in order to gain control of your assets.
Tax levy. A tax levy, on the other hand, is a continuation of the enforced collection process. When your unpaid tax bill has reached the point of being unsatisfied, the taxing authority will slap a tax levy against your assets. This means they can seize any and all of your assets to pay off your unpaid tax bill. Also, you may not receive an advanced notice.
|Jennifer Mathes, Ph.D.|