What is the difference between a Federal Tax Lien and a Federal Tax Levy?

rajneet

Administrator
Staff member
Federal tax liens and federal tax levies can both negatively impact an individual’s finances, credit and financial decisions. While both of these legal actions can cause short and long term financial damage, many taxpayers who owe back taxes to the IRS do not recognize that there is a difference between a lien and a levy..


When a taxpayer owes over $10,000 in personal unpaid back taxes to the IRS, a federal tax lien is issued. The IRS issues federal tax liens in order to secure their position after any secured credits to receive proceeds and collect the unpaid tax from the sale of any assets. The most common type of lien is real estate sales. If a taxpayer was to sell their property with a federal tax lien attached, the escrow would automatically transfer any funds received to the IRS before giving any proceeds to the taxpayer.


A federal tax levy, which can be a bank or wage levy, grants the IRS the legal right to collect on any unpaid taxes owed to the IRS regardless of how much you owe. Federal tax levies can be extremely harmful as they allow the IRS to clear your entire bank account and most of your paycheck, leaving you with almost no funds for your monthly expenses.

The IRS can file the issuance of federal tax liens and levies at the same. At Lifeback Tax, we have helped our clients release their wage garnishments, wage levies, and federal tax liens.
 

faustnuggis

New member
Federal tax liens and federal tax levies can both negatively impact an individual’s finances, credit and financial decisions. While both of these legal actions can cause short and long term financial damage, many taxpayers who owe back taxes to the IRS do not recognize that there is a difference between a lien and a levy..


When a taxpayer owes over $10,000 in personal unpaid back taxes to the IRS, a federal tax lien is issued. The IRS issues federal tax liens in order to secure their position after any secured credits to receive proceeds and collect the unpaid tax from the sale of any assets. The most common type of lien is real estate sales. If a taxpayer was to sell their property with a federal tax lien attached, the escrow would automatically transfer any funds received to the IRS before giving any proceeds to the taxpayer.


A federal tax levy, which can be a bank or wage levy, grants the IRS the legal right to collect on any unpaid taxes owed to the IRS regardless of how much you owe. Federal tax levies can be extremely harmful as they allow the IRS to clear your entire bank account and most of your paycheck, leaving you with almost no funds for your monthly expenses.

The IRS can file the issuance of federal tax liens and levies at the same. At Lifeback Tax, we have helped our clients release their wage garnishments, wage levies, and federal tax liens.
if I only owe the IRS 500$, can they still levy my wages?
 

rajneet

Administrator
Staff member
Yes, if you owe for back taxes and your name is on the daugters bank account, the IRS can levy the account. It is probably best to remove your name of your daughters account. In the case the IRS issues a levy, you can get the levy released but it is a lot of hassle and frustration dealing with the IRS.
 
Top