The Difference Between An IRS Levy And An IRS Lien

2 common methods come to mind when thinking about the way the IRS attempts to gather delinquent taxes. An IRS tax levy and an IRS tax lein. Many have confused these as being the same, but, in reality, they aren't.

An IRS levy is a seizure of individual assets to pay a tax debt. On the other hand, a tax lien protects and secures the IRS interest in a property as well as any rights to property. A tax lien will not actually take a property. It normally, will go into effect at the time of sale. At the time of sale, the IRS has rights to the proceeds of the sale. However an IRS levy actually seizes personal property.

Prior to the IRS levying, usually 3 conditions need to be met:

1. The tax has been assessed by the IRS and a Notice of Demand for Payment has been sent.

2. The tax payer has avoided or simply declined to pay the tax debt.

3. The IRS mailed a "Final Notice of Intent to Levy and Notice of Your Right Hearing" a minimum of 30 days before the tax levy. The IRS may place it at a home, a place of business or send it to the last known address that the IRS has on file.

There are four common types of tax levy sources for the IRS:

1. Bank Account: When the IRS removes money directly from your bank account. One generally will not know about it until it has actually happened. The bank will be required to freeze the funds up to the amount due on the day the levy came. After 21 days if the tax levy has not been removed, the bank has to send the funds to the IRS.

2. Wage Levy: This levy is sent to your employer and demands that the employer withhold a specific portion of a pay check. The IRS can take up to 85% of a paycheck. The government may also levy Social Security Payment

3. Third party accounts: This levy would consist of retirement accounts, investment accounts, 1099 sources and essentially any source of income or assets with a few exceptions.

4. Assets: Because this is typically difficult for the IRS to do, it is the least common type of IRS levy. This would include automobiles, homes, watercraft or any other sort of asset.

There is also a difference between a continuous tax levy and a onetime levy. A continuous levy could be placed on social security, wages and other sources of income. A one-time levy would include a bank levy and 1099 income. The IRS may only acquire the amount in the account or the total amount due the independent contractor the day the IRS levy was received. This won't prevent the IRS from levying again.

Techniques to stop IRS levy proceedings:

An IRS tax levy will continue until the tax bill is paid, the statute of limitations expires, or other arrangements are made, which could include an Installment Agreement, having the account placed in Section 53 or a hardship, or having an Offer in Compromise accepted.

Additionally, working with a tax specialist with practical experience in working with the collection department of the IRS will make sure that the tax laws are worked to the tax payer’s benefit. An experienced tax representative will also know how to deal with tax debts and the fastest method to stop IRS levy activity based on the tax payer's unique circumstances.

Cynthia Kuhne has been helping individuals resolve their tax problems effectively for over 16 years. She is a licensed Enrolled Agent with both the knowledge and experience to stop IRS levy action quickly. She is the founder and president of CKTax Inc., a full service tax relief company with an "A+" BBB record. If the IRS has attached a levy to your assets, is about to, or you just have a tough tax problem, visit http://www.cktax.com or call 888-894-2005 now.