What is the Difference Between a Levy and a Lien?

 I represent taxpayers in Winchester, VA,and often get the clients who ask; What is the difference between a levy and a lien? A federal tax lien comes into being when the IRS assesses a tax against you and sends you a bill and you neglect or refuse to pay it. Generally, if you owe $10,000 or more, the IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.  If you owe any amount of back taxes, the IRS still holds a lien on your property even if you have not received the Notice of Federal Tax Lien.  This is known as a “silent lien” and comes into existence with any back tax debt owed to the IRS.

A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a legal claim against your property to secure payment of your tax debt, while a levy actually takes the property to satisfy the tax debt.  When filed, the Notice of Federal Tax Lien is a public document that alerts other creditors that the IRS is asserting a secured claim against your assets. Credit reporting agencies may find the Notice of Federal Tax Lien and include it in your credit report.

The IRS will send you several notices prior to issuing a tax levy.  The order of the notices will likely be...