Home | Help! Is This a Tax Lien or a Levy?

Help! Is This a Tax Lien or a Levy?

Dec 05, 2022

Internal Revenue Service and state tax liens and levies are often confused and misidentified by a taxpayer who receives these nasty love notes in the mail. It absolutely makes sense, as both will cause panic! Which one is which, and what do they mean??? Here’s a brief explanation to clear the air and make sure you know what each is and what they mean.

First, what is the difference between a tax lien and a levy?

  • Tax lien – (noun) it is a legal claim filed against your real or personal property to protect the interest of the issuing agency in securing payment of a tax debt.
  • Tax levy – (verb) is the action taken to seize real or personal property to satisfy a tax debt.

What is the typical tax lien process, and what does it mean?Tax liens are filed by the IRS or state tax agencies when a taxpayer accrues a tax debt. Standard operating procedures of the IRS and states dictate that once a debt is assessed, initial notice(s) are sent informing you that there is a balance owed. If those debts are not addressed within the timeframe stipulated, the IRS or state will record a lien with your local County Clerk’s Office. This lien is a public record and essentially notifies any parties interested that you have a tax debt owed. The document will summarize each tax period and the balance owed for each at the time of filing. Please note that with each new tax debt accrued, a new tax lien can be filed against you, which means you could have multiple tax liens against your property.

What is the typical tax levy process?

The IRS and most states will issue a warning notice to you before levy actions are taken. These notices typically provide a short deadline to work with the IRS or state to negotiate a resolution of your tax debt, thus preventing the issuance of levies. On rare occasions, there are instances where levies can occur without notice. The IRS or state usually employs this tactic to force a taxpayer to resolve a tax debt before even greater collection tactics are called into play, such as physical property seizure.

The most common actions are a levy notice issued to your bank or a wage garnishment issued to your employer. However, there are several other sources the IRS or state can choose to collect from: accounts receivables for businesses, Social Security benefits, retirement accounts, rental income, cash value of a life insurance policy, dividends, and even commissions to name a few.

How do tax liens and levies negatively impact me?

A tax lien filed can have several negative impacts on a taxpayer. Most importantly, it will cause issues with obtaining lending, such as a mortgage, thereby affecting your ability to obtain credit. If you are a business owner, a tax lien will attach to all business property as well as the rights to business property, which can also include accounts receivables.

Levies have a more immediate effect once issued; since a levy is used to actually seize property to pay toward or satisfy a tax debt, you can face property loss. The most common type of loss would be the loss of funds available in a bank account. When the IRS or state levies your bank account, you can lose the funds needed to pay your monthly bills. As for businesses, this can affect issuing payroll to your employees or paying for necessary materials for contracts. As you can see, none of these would be fun to deal with.

How can I address a tax lien or levy?

Dealing with either a lien or levy can be extremely stressful and confusing. An IRS or state tax lien can be removed if you pay your tax debt in full. However, this is not an option in most cases, as most tax debts go beyond your available funds to satisfy them. And an IRS or state levy can be removed if you know your rights and how to best negotiate a position that will not cause more strife for you or your business in the coming weeks and months.

The representatives at Golden Lion Tax Solutions have extensive experience with IRS and state tax liens and levies that can be issued and the ways to address them, thus protecting you and your interests moving forward. We understand how traumatizing it can be when the IRS or state issues threatening notices and how best to address the tax debt at each step of the collection process. We will analyze your specific situation to determine the best resolution. We will walk you through the entire process, from determining your resolution to the release of any tax liens filed.


Trust. Protection. Wisdom.

Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.