When you owe back taxes, two of the most intimidating IRS collection terms are lien and levy. Many taxpayers use them interchangeably — but they’re very different.
- An IRS lien is a claim against your property.
- An IRS levy is an actual seizure of it.
Understanding that difference can mean the difference between protecting your home and losing your paycheck or bank funds.
📘 Official Reference:Understanding a Federal Tax Lien — IRS
📘 Official Reference:Levy — IRS Seizure of Property
What Is an IRS Tax Lien?
A federal tax lien is the government’s legal claim against your property when you fail to pay a tax debt after notice and demand. It attaches to:
- All real and personal property you own (homes, cars, bank accounts)
- Future property you acquire while the lien is active
- Business assets if you’re self-employed
The lien gives the IRS a secured interest — similar to a mortgage or judgment — ensuring it gets paid before other creditors if you sell or refinance.
💡 Think of it like this: A lien is a warning flag that the IRS has dibs on your property, but it doesn’t take it — yet.
📘 Reference: Notice of Federal Tax Lien (NFTL)
What Is an IRS Levy?
An IRS levy is a legal seizure of your property to satisfy unpaid taxes. It’s the next step after a lien, and it’s far more serious.
With a levy, the IRS can take:
- Physical property, including vehicles or even real estate
- Wages (wage garnishment)
- Bank account funds
- Social Security payments
- Business receivables
💡 In short: A lien secures the debt, while a levy collects it.
📘 Reference: IRS Levy Process
Comparison Chart: IRS Lien vs. Levy
| Feature | Tax Lien | Tax Levy |
|---|---|---|
| Definition | Government’s legal claim against your property for unpaid taxes | Government’s legal seizure of your property or funds |
| Purpose | To secure payment and notify creditors of IRS interest | To collect the unpaid tax debt directly |
How to Stop a Lien or Levy Before It’s Too Late?
The IRS provides multiple legal paths to resolve your debt and prevent enforcement.
Enter an Installment Agreement
A payment plan shows good faith and halts further levy action.
📘 Apply Online: IRS Payment Plans & Installment Agreements
Request a Collection Due Process (CDP) Hearing
If you received a Final Notice of Intent to Levy, you have 30 days to appeal with Form 12153. This freezes all collection activity until resolved.
File for Currently Not Collectible (CNC) Status
If paying would cause hardship, the IRS can pause collections entirely.
📘 Program Info: Currently Not Collectible Program
Submit an Offer in Compromise (OIC)
Settle your debt for less than you owe if you meet financial qualifications.
📘 OIC Details: Offer in Compromise — IRS
Consequences of Ignoring IRS Enforcement
Ignoring a lien or levy notice can lead to:
- Frozen bank accounts
- Garnished wages
- Seized assets
- Damaged credit and public records
- Loss of refund offsets
- Future difficulty obtaining loans or mortgages
💡 Remember: The IRS rarely acts without warning — but once it starts enforcing, your options narrow quickly.
📘 IRS Enforcement Overview: Tax Collection Process
How a Tax Attorney Can Protect You?
A tax attorney can:
- File immediate appeals or hardship claims
- Negotiate lien withdrawals or levy releases
- Stop wage garnishment and bank seizures
- Represent you in hearings and negotiations
- Prevent future liens through compliance planning
Once your attorney files Form 2848 – Power of Attorney, the IRS must communicate through them — not you.
Need help with a similar issue? Contact our firm today for a consultation.
A lien warns that the IRS has a claim on your property — a levy means they’re taking it. Understanding this difference helps you act before your paycheck, bank account, or home are at risk.
If you’ve received any IRS collection notice, contact Pelham PLLC immediately. Our tax attorneys can stop levies, remove liens, and negotiate fair resolutions under current IRS programs.
FAQs
Can the IRS levy my property without notice?
No. You must receive a Final Notice of Intent to Levy and have 30 days to respond or appeal.
Will a tax lien affect my credit?
It no longer appears on major credit reports but remains a public record viewable by lenders and title companies.
Can I stop a levy after it starts?
Yes, by paying your balance, setting up a payment plan, or requesting a levy release if it causes hardship.
How long does an IRS lien or levy last?
Both generally last until the 10-year collection statute expires or the debt is paid or settled.
