If you are in IRS tax debt, you risk an IRS Lien or IRS Tax Levy being placed on your belongings to cover that IRS debt. A tax lien and tax levy are both ways the IRS can demand your repayment of what is owed to the IRS. Prevent having the IRS stake a claim on what you have worked so hard for; always file your taxes when they are due and remember to pay your IRS tax debt completely. Do not take your chances with an IRS Levy or Tax Lien, and stay out of IRS Debt!
How Does a Tax Lien Differ from a Tax Levy?
Tax Lien
This is one of the many ways that the IRS stakes their claim that you owe an IRS Debt. It is a publicly available record that states you have an IRS debt. A Tax Lien safeguards payment of your IRS debt upon sale of your assets. Though your assets are not physically taken from you (unlike a tax levy), a tax lien does put you in a challenging monetary position. Due to the fact that it is public record, a tax lien shows when someone runs your credit report, clearly announcing you are in IRS debt. A tax lien also hampers any financing on your assets.
Not only does a tax lien apply to property you currently possess, but it also covers any property you may purchase. You must fulfill your IRS tax debt before selling your property or getting the IRS tax lien lifted once a tax lien is enforced.
Tax Liens and Your Credit Report
Many don't even realize they have a Tax Lien for what they owe the IRS until they try to do something regarding their credit. Even when a tax lien is lifted, it may still appear if you run your credit report for up to ten years. The Tax Lien will be seen by creditors, and they will think twice about dealing with you. This is why it is very important for you to resolve your IRS tax debt before you are issued a tax lien.
Tax Levy
A tax levy (unlike a tax lien) is an actual physical taking of assets to fulfill your IRS debt. A tax levy can be placed on your pay, bank account, etc., as coverage for your IRS tax debt. For the government to issue a tax levy on your checking account, the IRS must first send your bank a letter alerting them that they are seizing your account due to your IRS debt. This notice commands the bank to freeze all of your funds and to give them to the IRS as coverage for your IRS tax debt. A tax levy on your savings account can destroy your finances and is usually the repercussion of neglecting taking care of an IRS tax debt. For this reason, it is so very important to pay your IRS.gov tax debt promptly and to always take IRS notices thoughtfully before a tax levy is enforced.
Your Income
The IRS can also enforce an IRS tax levy on your salary, as previously acknowledged. You will get a Notice and Demand for Payment from the IRS after they gauge your IRS tax debt but before issuing a tax levy on your wages. If you choose not to pay your IRS debt or choose to disregard the notice, the IRS will send you a Final Notice, which gives you a 30-day window to handle your IRS debt before the IRS enforces the tax levy on your wages. If you again choose not to pay your IRS debt, the government will enforce the tax levy on your income to satisfy that IRS debt. To begin the tax levy process on your income (or "Wage Levy"), the IRS sends an IRS Wage Levy Notice to where you work. At that point,anywhere between 50 and 75% of your salary will be seized for the tax levy and submitted to the government as payment for what you owe the IRS. Enough will be left for you to cover your basic necessities: rent, bills, etc. The tax levy will remain until your complete IRS debt is recovered, including fees and interest.
Side-step IRS tax debt by filing your annual income taxes on time. Do not let the government slap you with a Tax Lien or Tax Levy. Avoid a Tax Lien or Tax Levy on what you have own, and keep the IRS at bay!
The government will not think twice about filing a Tax Lien or an IRS Levy if you owe IRS Debt. A tax levy or tax lien because of IRS debt can destroy your financial situation. Do not let a Tax Lien destroy your credit score. Do not let a Tax Levy take money directly from your bank.
