What is the Difference between a Notice of Levy and a Lien?

Wednesday, February 29, 2012
Most tax payers are highly confused when it comes to IRS terminology. If you have received a notice of levy, most likely you are finding difficulty differentiating between a levy and a lien. Unfortunately, they are easily misconstrued; therefore, understanding the difference is not only important for you in order to rectify the situation, but to help you understand your rights when you receive a notice of levy. Notice of Levy and Lien: What is Worse? When you receive a notice of levy or lien, the bottom line is both are not a good situation to be in as a tax payer. Therefore, not matter whether you receive a notice of levy or lien, it is important to take immediate action against them and resolve the issues with the IRS collection agent assigned to your case. Notice of Levy or Lien: What is a Lien? A lien typically comes prior to or in conjunction with a notice of levy. If you have received a lien notification, this means that the IRS is staking claims against anything you own. This doesn’t mean they are actually taking them, but they are staking claims in any profits you can gain from them. This can effect your credit as well as your overall ability to sell or purchase new cars, homes or even business opportunities. A lien will get priority even over collectors that are trying to obtain your personal property to pay off other debts. Notice of Levy or Lien: What is a Levy? A notice of levy on the other hand, comes after the lien process. If the tax payer still does not pay the outstanding balance after receiving a lien or the penalties of a lien, then the IRS will send out a notice of levy. At this time the IRS intends to size personal property and money in order to satisfy the debt. No longer is the IRS trying to stake claim in anything you own, they are simply taking it. Though both are bad to receive, a notice of levy is the final step before the IRS really takes action. Therefore, starting the process of resolving your tax bill earlier is the most important rather than waiting for the notice of levy to show up at your door. Remember that the IRS does not have to take you to court first – they can collect. You can often cease the collection of a notice of levy by simply starting to pay off your tax bill or pay paying the entire bill using a different line of credit. If you have received a notice of levy and you are unsure of what your rights are, it’s time to get help. The professionals at My Tax Attorney are familiar with how to handle a notice of levy and take precautions in protecting your personal property. Do you think you're struggling mainly because a lien is filed towards you? Examine out the IRS Tax Lien library web page to stay knowledgeable on what your choices are. These IRS sections on federal tax lien may give you a good deal of assistance. Do a local research in your county and state for applicable legal guidelines on tax liens at Google. Check out the Beverly Hills Bar Association.