Tax Lein vs. Tax Levy: What Is The Real Difference?

If you’re worried that you might be missing a payment to the IRS, then you might want to consider the various legal options available to you. In this article, we’ll talk about the different types of tax liens and levies the IRS can use. We will also cover on how to avoid losing both your assets and property to the IRS.

What Is A Tax Lien?

A tax lien is a legal claim made by the IRS against the property that you own to settle a debt. It can also include the property that you’re able to get after the IRS issues the claim. Although a federal tax lien can be used against your property, it won’t take it away. The IRS will notify you that it has a debt and will demand payment.

A notice of federal tax lien is a public record that the IRS can distribute to your creditors. It informs them that there’s a tax lien on their property.

If you can’t afford to pay the taxes that you owe, then the best way to avoid a tax lien is to settle the debt. The IRS also offers payment programs that help people pay their debts.  Here at Babbitt Tax Law, our team can help negotiate and settle your outstanding tax debt.

What Is A Tax Levy?

A tax levy is a process that the IRS uses to collect taxes. It can involve seizing your assets and other property to pay the taxes that you owe. There are various types of levies.

• Bank Levy
• Property seizure (i.e. cars, houses)
• Wage Garnishment
• Tax refund garnishment

You can convert your assets into cash and use the money to pay down your tax debt. However, if you have an existing payment plan agreement and are not able to pay your taxes due to economic hardship, the IRS can’t issue a levy.

How Does a Tax Lexy Work?

If you have not paid your taxes for an extended period, the IRS will issue a collection notice. You will then receive four warnings. These 4 warnings consist of:

• Notice CP14 (Balance Due)
• Notice CP-501 (Important)
• Notice CP-503 (Urgent)
• Notice CP-504 (Refund Levy)

The IRS’ Final Notice of Intent to Levy is the last notice that you’ll receive before the agency starts to collect your assets. It gives you 30 days to appeal the decision. If you don’t pay the tax bill or appeal the decision, the IRS will start to collect your assets.

Not Sure Where To Start?

Do you still have questions about what your options are? Avoid an audit and IRS tax debt & connect with the tax professionals at Babbitt Tax Law today. We are Southwest Florida’s premier tax attorneys.

Give us a call now at 239-300-9492.