Levins Tax Law
Schedule your initial consultation:

Experienced and Trusted
Representation From A Tax
Attorney And Former IRS Agent
And "BIG 4" Tax Partner

Photo of Attorney Gerard J. Levins

Federal tax liens and tax levies are different

On Behalf of | May 15, 2019 | Tax Controversies

Massachusetts residents who cannot afford to meet their obligations to the IRS could find themselves facing a variety of repercussions. Two of the possible consequences are federal tax liens and tax levies. Some people use the terms “lien” and “levy” interchangeably, but they are different.

When the IRS uses a tax levy to satisfy unpaid taxes, it actually seizes property. This usually involves seizing bank accounts, seizing property and/or garnishing a taxpayer’s wages. This action is often taken after a tax lien.

When the government puts a lien on an individual’s property, it is claiming an interest in it. For instance, many tax liens are on real estate, but could include other assets. A tax lien on a Massachusetts resident’s home could prevent its sale as long as the lien is active. It could even interfere with a homeowner’s attempts to refinance the mortgage loan.

The only way to eliminate a tax lien or a tax levy is to somehow satisfy the tax debt. For those taxpayers who cannot pay what they owe outright, it might be possible to enter into an agreement with the IRS such as an installment agreement or an offer in compromise. Depending on the situation, it may even be possible to have the IRS stop collection efforts until the taxpayer’s financial situation improves. It may also be appropriate to appeal it.

The most important thing to do when it comes to federal tax liens or levies is not to ignore them. The impact on a taxpayer’s finances could be devastating, if not now, then in the future. Even when they do not necessarily impact an individual’s credit rating, they do have certain ramifications that could cause irreparable damage directly or indirectly.


FindLaw Network