Difference between an IRS lien and a levy

A tax lien is a document registered with the county where the taxpayer lives or has lived according to the IRS tax records of the last known address. It affects the creditworthiness of the taxpayer and puts a strain on all assets and rights to assets. Including real estate and personal property.

The federal tax lien arises when a “person” obligated to pay a federal tax fails to pay the tax following a government demand for payment. IRC § 6321. For federal tax purposes, a “person” is defined to include an individual, trust, estate, partnership, association, corporation and corporation. IRC § 7701(a)(1). The lien is effective from the date the government assesses the tax. If the taxpayer fails or refuses to pay the assessed tax, the lien is deemed to go back to the assessment date. IRC § 6322. The service is not required to file a federal tax lien notice in order for the tax lien to be affixed. As discussed later in the text, the Service may file a federal tax lien notice to override the taxpayer’s other creditors.

A levy is a document issued to a source of income or an entity that has rights to your personal or real property.

For example Bank for Bank Account Seizure; Garnishment of wages to the employer, garnishment levy on vehicles, equipment, real estate, business assets.

Section § 6331 of Title 26 of the United States Code defines the ability of the IRS to collect taxes by issuing a tax assessment notice.

Tax assessment notices are used to add to the equity of a taxpayer’s asset. These can be issued through the appropriate forms and permits to third parties such as claims, factors, sources of income from tenants, bank accounts, pension funds, social security income, seizure of other assets.

Also when confronted with lien and tax lawsuits. There are over twenty-six types of IRS debt collection processes and procedures that cannot be described in one article.

You need a tax professional who has represented clients for many years to engage the right representation. Not all tax attorneys, CPAs, or registered agents want to deal with IRS Collection or even know how.

The process and procedures for resolving tax debts are fundamentally different from representing individuals or companies in audits and tax preparations. It takes years to identify the right tax debt resolution options available to taxpayers.

When hiring, make sure you are not hiring what is known within the IRS as a tax collection mill. There are so many companies that hire salespeople to pull up tax deposit lists to secure customers. However, these companies do not inform the client that they will not initiate representation until the advance fees are paid in full. In addition, some are nothing but scams. BEWARE who you hire.

You can go to google and find Internal Revenue Manual Part 5 Collection and view the table of contents. It details all of the processes and procedures that the IRS undertakes to resolve tax debtor cases. Which one is right for you?