IRS Tax Debt Help – The Difference Between An IRS Levy And An IRS Lien

Two standard methods come to mind when thinking about how the IRS tries to recover delinquent taxes. An IRS tax lien and an IRS levy. Many have confused these as being the same, but, in reality, they aren’t.


An IRS levy is a seizure of personal assets and or property to pay a tax balance. However, a tax lien safeguards and secures the IRS interest in a property and any rights to property. A tax lien will not actually seize a property. Usually, it comes into effect when the property is sold. At the time of sale, the IRS has rights to the proceeds of the sale. However an IRS tax levy actually seizes the personal property.


Before the IRS can collect, normally3 conditions need to be met:

1. The IRS assessed the tax and sent a Notice and Demand for Payment.

2. The tax payer has neglected or simply refused to pay the tax debt.

3. The IRS sent a Final Notice of Intent to Levy and Notice of Your Right Hearing at least thirty days prior to the tax levy. The IRS may leave it at a home, a place of business or mail it to the last known address that the IRS has on file.


There are 4 common types of levy sources for the IRS:

1. Bank Account: When the IRS takes money directly from your bank account. One usually will not know about it until it has already happened. The bank will be required to freeze the funds up to the amount due on the day the tax levy came. If the tax levy is not released within 21 days, the bank is required to send the funds to the IRS.

2. Wage Levy: Is sent to the employer and mandates the they withhold a specified percentage of the taxpayer’s paycheck. The IRS can levy up to 85% of your pay check. The IRS may also levy Social Security Payment

3. Third party accounts: This levy would consist of retirement accounts, investment accounts, 1099 sources and essentially any source of income or assets with a few exceptions.

4. Assets: Because this is typically difficult for the IRS to do, it is the least common type of IRS levy. This could include cars, residences, boats or essentially any other type of asset.


There is also a difference between a continuous tax levy and a onetime levy. A continuous levy would be issued on social security, wages and other sources of income. A one time tax levy could include 1099 income and a bank levy. The IRS only has rights to the amount in the account or due the independent contractor the day the IRS levy was sent. This will not prevent the IRS from levying again.


Methods to stop irs levy proceedings:


An IRS levy will proceed until the tax bill is paid, the statute of limitations ends, or other arrangements are made, which can include an Installment Agreement, getting the account placed in Section 53 or a hardship, or having an Offer in Compromise accepted.


Also, hiring a tax expert with experience in working with the collection department of the IRS will make sure that the tax laws are worked to the tax payer’s advantage. An knowledgeable tax professional will also know how to deal with tax liabilities and the quickest way to stop irs levy action based on the tax payer’s particular situation.


About The Author

TK Bradley

tk bradley is a tax relief expert with many years of dealing with the irs and helping taxpayers to understand their rights and to settle their tax debt problems.