An IRS tax lien is the federal government’s right to ensure payment of owed taxes by allowing them to place a secured debt on a negligent taxpayer’s property. Tax liens often result because of delinquent taxes and can be placed on real property or personal property. Typically, they act almost as a mortgage against the property and only come into play when the taxpayer is attempting to sell the real or personal property. At the time of sale, the IRS can then claim a right to the proceeds of the sale.
The IRS may file a federal tax lien if a taxpayer owes back taxes. According to the Internal Revenue Code, Section 6321, “[i]f any person liable to pay any tax neglects or refuses to pay the same after demand, the amount including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition there to, shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.” The IRS files tax liens to assist in its efforts to collect the taxes owed. A lien gives the IRS a legal claim to your property as security or payment for the tax liability. A tax lien is different than a wage garnishment or bank levy.
In order to have a lien released a taxpayer must obtain a Release of the Notice of Federal Tax Lien. Generally, the IRS will not release a lien until the tax has either been paid in full or no longer has a legal interest in collecting the tax. The IRS has standardized procedures for lien releases, discharges and subordination. In situations that qualify for the removal of a lien, the IRS will generally remove the lien within 30 days and the taxpayer may receive a copy of the Certificate of Release of Federal Tax Lien.
An IRS levy is a technical term used to denote an administrative action by the IRS to actually seize property to satisfy a tax liability. A tax levy gives the government the ability to impose this collection without having to get permission from a court. Typically, the IRS uses a levy to seize two types of property – income and proceeds in a bank account.
The IRS must issue a Notice of Intent to Levy at least thirty days before the IRS can actually impose the levy. However, a Notice of Federal Tax Lien is generally issued after the tax lien arises. Also, while a federal tax lien applies to all of a taxpayer’s property and rights to property, an IRS levy is subject to more specific restrictions. Often times certain property covered by a tax lien may be exempt from an IRS levy. In those instances the IRS must obtain a court judgment in order to take that property.
Related Articles
What is Irs Tax Fraud?
By: Roni Deutch | 04/03/2008 | Taxes
With recent high profile tax evasion cases making headlines people across the country are talking about taxes. However, there is a big difference between not paying taxes and committing tax fraud.
Advice on Internal Revenue Service Audits
By: Roni Deutch | 19/02/2008 | Taxes
If you want to avoid a nasty audit by the Internal Revenue Service, be sure to avoid making a mistake that could signal a red flag to the government’s commuter systems.
Irs Collections and the Statute of Limitations
By: Roni Deutch | 03/04/2008 | Taxes
The Internal Revenue Service (IRS) is feared by millions of American’s because of their aggressive collections. However, generally they cannot make attempts to collect a debt that accrued over 10 years ago.
How to Settle Irs Back Taxes
By: Roni Deutch | 20/05/2008 | Taxes
Thousands of taxpayers find themselves in debt to the IRS every year. Fortunately the IRS has several tax settlement programs available to taxpayers who cannot afford to fully repay their taxes. When a taxpayer settles with the IRS they are agreeing to pay their income tax debts in part or in full through one of the IRS’s back tax resolution programs.
Expect Even More Audits in 08
By: Roni Deutch | 18/03/2008 | Taxes
Because of increasing pressure from Congress and the President, the IRS has began an effort to increase the number of audits they perform to help lower the ever growing tax gap. Eliminating the tax gap – estimated to be $312 billion to $353 per year – would provide enough money for the federal government to pay for Medicaid’s entire 2007 budget.
7 Commonly Overlooked Deductions to Keep in Mind
By: Roni Deutch | 05/02/2008 | Taxes
While preparing tax returns people often forget to take advantage of all deductions available to them. These 7 deductions represent an easy way to help lower your income tax liability, but are often overlooked.
Tax Preparation and Electronic Tax Preparation Options
By: Amber Lowery | 20/02/2006 | Finance
Using tax preparation software and online serivces can make doing your taxes much less of a headache. Learn all about it here!
Tax Code Changes to Remember This Tax Season
By: Roni Deutch | 04/03/2008 | Taxes
The United States tax code is constantly being changed and updated by Congress. It is essential to stay informed on these tax changes as they may affect your next income tax return.
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
Tax Refund
By: re371 | 11-07-2008
how far can i claim an irs refund
Why am I getting a fine for my tax return for 2005 ...
By: Jyslinn | 10-07-2008
why am I getting a fine for my tax return for 2005 now, in 2008?
What tax bracket am I in?
By: Laura | 10-07-2008
I'm trying to figure out my budget for next year as I will be returning to work in September. My husband and I have combined income of about 150K. We have 4 kids and own a home. How can I figure out the dollar amount of taxes for 08-09?
Taxes
By: bb1004 | 09-07-2008
Can I claim partial car payment on taxes if I have a part time business if I am uses my car for traveling?
How do you reinstate your 501c3 that has elasped
By: Thelma Manley | 08-07-2008
How do you reinstate your 501c3 that has elasped
What does TCV mean in a city property tax listing ...
By: clueless | 08-07-2008
what does TCV mean in a city property tax listing?qt=q
Q&A Powered by:
Latest Taxes Articles
How to Stop IRS Levies
By: Neil Lemons | 17/07/2008
The IRS can get very aggressive with tax defaulters. They also have very wide powers of recovery and will not hesitate to use it particularly when tax dues are large. However, many tax payers are caught unawares by the levy action. Learn How to Stop IRS Levies.
What to do in an IRS Audit
By: Neil Lemons | 16/07/2008
For most taxpayers, filing of return is the end of their engagement with the IRS for the year. In most cases, if the return is correctly filled up. What do you do in an IRS audit? Find out.
How To Remove Federal IRS Tax Liens
By: Neil Lemons | 16/07/2008
IRS liens are hard on a family's life, health, as well as financially; they can cause a financial loop that's very difficult to get out. Read more information on how to remove federal IRS tax liens written by one expert.
How to Survive an Irs Audit and the Irs Recordkeeping Requirements
By: Christy Pinheiro, EA | 15/07/2008
Every day, clients complain that the IRS’ recordkeeping requirements are cumbersome, outdated, and difficult to understand. On one hand, the IRS requires taxpayers to substantiate their expenses, but makes it difficult for taxpayers to comply. This requirement is especially tricky for business taxpayers, who must devote precious time, energy, and money to retain and log even the smallest business expenses for fear of an IRS audit.
9 Summertime Tax Tips From the Roni Deutch Tax Center®
By: Roni Deutch | 15/07/2008
Summer months land right in the middle of the tax year, therefore it is a great time to review your finances and prepare a tax strategy for the rest of the year. Follow these 9 helpful summertime tax tips from the Roni Deutch Tax Center® tax professionals, and you will be extra prepared for tax season come this January.
The Tax Lady Roni Deutch Compares the Tax Views of Presidential Hopefuls Obama and Mccain
By: Roni Deutch | 15/07/2008
In November, either Sen. John McCain or Sen. Barack Obama will likely be elected as the next Commander-in-Chief of our Nation. The economy is changing and in the next five months, the economic conditions are likely to get even worse. Therefore, it is crucial to understand their tax views now so that we can begin to plan for the future of our country’s economy. In the article below The Tax Lady Roni Deutch compares and contrasts the views of each candidate to help taxpayers determine whom their t
Starting a Llc
By: Nick Braun EA PhD | 15/07/2008
LLC stands for Limited Liability Company and the owners are called members. The LLC is a relatively new type of business structure. It was only in 1996 that most states had recognized them.
Setting Up an S Corporation
By: Nick Braun EA PhD | 15/07/2008
We will take a close look at the drawbacks and S corporation advantages, also known as S corps. S corps offer limited liability and simple tax treatment. They’re pass-through entities which means the profits of the business pass through to the owners personal tax returns.
More from Roni Deutch
9 Summertime Tax Tips From the Roni Deutch Tax Center®
By: Roni Deutch | 15/07/2008 | Taxes
Summer months land right in the middle of the tax year, therefore it is a great time to review your finances and prepare a tax strategy for the rest of the year. Follow these 9 helpful summertime tax tips from the Roni Deutch Tax Center® tax professionals, and you will be extra prepared for tax season come this January.
The Tax Lady Roni Deutch Compares the Tax Views of Presidential Hopefuls Obama and Mccain
By: Roni Deutch | 15/07/2008 | Taxes
In November, either Sen. John McCain or Sen. Barack Obama will likely be elected as the next Commander-in-Chief of our Nation. The economy is changing and in the next five months, the economic conditions are likely to get even worse. Therefore, it is crucial to understand their tax views now so that we can begin to plan for the future of our country’s economy. In the article below The Tax Lady Roni Deutch compares and contrasts the views of each candidate to help taxpayers determine whom their t
Tips for New Entrepreneurs From Roni Deutch
By: Roni Deutch | 08/07/2008 | Small Business
Roni Lynn Deutch is the founder and CEO of both a nationwide tax resolution law firm, and a tax preparation franchise. People always ask Ms. Deutch what advice she would give to new entrepreneurs looking to achieve success. Although each person is different, and every business will require it’s own plan, below are the some tips for new entrepreneurs from Ms. Deutch.
10 Myths About Small Businesses
By: Roni Deutch | 08/07/2008 | Small Business
There are probably hundreds of myths and misconceptions when it comes to running a small business. People often spout-off lies and bad advice on business far too frequently without really knowing if they are correct or not. We have all probably contributed to these misconceptions at one point or another, but now is the time to separate myth from fact.
The Tax Lady Roni Deutch Analyzes the Tax Views of Sen. John Mccain
By: Roni Deutch | 17/06/2008 | Taxes
Polls are showing that the economy is turning out to be the most important topic in the upcoming general election. Since economic, and tax issues affect every single day of our lives, it is important to fully understand both candidate’s tax views. To help begin your tax research, please enjoy The Tax Lady Roni Deutch’s analysis of Sen. John McCain’s tax policies.
How to Support the Economy With Your Stimulus Check
By: Roni Deutch | 17/06/2008 | Taxes
As many people across the country have already gotten their economic stimulus checks, it is important to remember that the goal of this free money is to help stimulate the economy. So before you waste your check, consider these ways to support the economy with your check.
The Tax Lady Roni Deutch Analyzes the Tax Views of Sen. Barack Obama
By: Roni Deutch | 10/06/2008 | Taxes
Now that Sen. Hilary Clinton has endorsed Barack Oabama for president, he can now officially move onto campaigning for the General Election. With the current economic state including the mortgage crisis, ever-increasing gas prices, and record unemployment rates, people are thinking about taxes. To help begin your tax research enjoy The Tax Lady Roni Deutch’s analysis of Barack Obama’s tax policies.
Watchmefranchise Reviews 4 Franchises That Expanded Too Fast
By: Roni Deutch | 10/06/2008 | Small Business
Expanding too rapidly can be a problem for any major franchisor. Many franchises have a built-in customer base that can support national expansion. However, some franchises do not have this and can suffer from over saturation. This leads to not only a halt in expansion, but also cause the decline of nationwide sales. Over expansion has become even more of a problem with modern franchising techniques that include multi-store owners and private investments in corporate offices. These investors can
Finance 
