What is the difference between an IRS tax lien and an IRS tax levy?
An IRS tax lien is the federal government’s right to ensure payment of owed taxes by allowing them to place a secured debt on a negligent taxpayer’s property. Tax liens are generally a result of delinquent taxes and they can be placed on real property or personal property. Typically, they act almost as a mortgage against the property and only come into play when the taxpayer is attempting to sell the real or personal property. At the time of sale, the IRS can claim a right to the proceeds of the sale. An IRS levy is a technical term used to denote an administrative action by the IRS to actually seize property to satisfy a tax liability. A tax levy gives the government the ability to impose this collection without having to get permission from a court. Typically, the IRS uses a levy to seize two types of property – income and proceeds in a bank account. By law, the IRS is required to issue a Notice of Intent to Levy at least thirty (30) days before the IRS can actually impose the levy.
