Tax Lien vs. Tax Levy: Differences & What to Expect

A tax lien and a tax levy are two notable collection actions by the IRS against individuals with substantial tax debt. While a tax lien is the IRS officially exercising certain rights over your property as a result of unpaid taxes, a tax levy is the actual seizure of your property. Understanding both tax lien and levy, as well as their differences, puts you in a better position to protect your assets. Tax attorneys are best to help you resolve all types of tax issues. Continuing on the subject, we present a brief overview of a tax lien and tax levy, as well as what to expect when facing any collection actions. Read on.

Tax Lien

When you miss tax payments and end up amassing a sizable tax debt, the IRS evaluates what you owe and then sends you a bill known as ‘Notice and Demand for Payment’. Failing to respond to the aforementioned notice leads to the filing of a federal tax lien against your assets. The IRS will not only file a Notice of Federal Tax Lien but also initiate other creditors about its rights over your assets. The tax lien will apply to all the assets you own till the date it is filed, and also upon all the assets that you will acquire in the future.

Related Blog: A Brief Guide to Understanding IRS Tax Appeals

The IRS will inform you before filing a federal lien and give you a brief window of opportunity to appeal under the CAP program. The collection due process provisions, on the other hand, allow you to appeal a tax lien after it is filed against you. Our tax attorneys in Fort Worth, Texas can help you navigate the appeal process to boost your chances of getting a favorable outcome.

Tax Levy

While the tax lien gives the IRS rights to your property, a tax levy is the actual seizure of your assets. A tax levy is only activated if you do not respond and act promptly upon receiving a tax lien notice from the IRS. If you fail to pay off the tax debt or negotiate a payment plan with the IRS, the agency is forced to seize your income, properties, and other assets to service your tax debt.

If the IRS plans to seize your assets, it will first send you a Final Notice of Intent to Levy (Letter 1058 or Notice LT11). The notice allows you to schedule a collection due process hearing and avoid the seizure of your property. Respond to the notice in a timely manner to avoid losing your rights to appeal and your hard-earned assets. Contact a tax lawyer without delay to chart the way forward.

Related Blog: Must Know Information about IRS Levies

Problem Resolution

A tax levy is the final step the IRS takes in respect of outstanding tax debts. When faced with a notice for a tax lien, it is advisable to contact your tax attorney and seek tax lien assistance without delay. Based on your attorney’s advice, you may have to pay off the entire tax liability, apply for a Certificate of Discharge, Certificate of Subordination, or Withdrawal of the Notice of Federal Tax Lien. Respond to IRS notices on time and consult your tax lawyer to file for a hearing to stop the IRS from seizing your assets.

A tax lien or tax levy can be avoided by paying all your tax debt in full and responding to any correspondence from the IRS immediately. If you happen to find yourself in murky waters when dealing with the IRS, it pays to have the best tax attorney in Fort Worth fighting your case.

The Last Word

The IRS always offers you a chance to act against any potential collection actions against you. Make it a point to respond to any initial notices and file your tax returns without fail. When faced with IRS tax problems, reach out to our team of experienced tax attorneys in Fort Worth, Texas for quick problem resolution and safeguarding your assets from the IRS. Contact the Law Offices of Nick Nemeth at (972) 426-2553 or email us at

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