What’s the Difference Between a Tax Lien and Levy?

<h1>What’s the Difference Between a Tax Lien and Levy?</h1>Author: <a title="Roni Deutch" href="http://www.articlesbase.com/authors/roni-deutch/46490.htm">Roni Deutch</a> The term “levy” is used to describe a number of collection methods the IRS employs. Levies actually redirect funds to the IRS as a repayment of a debt. Following are a few different types of levies: Wage garnishments actually fall under the levy heading. Wage garnishments redirect a portion of your income directly to the IRS. A garnishment continues until either the debt is repaid, expires, or you successfully negotiate a release. Wages can be a paycheck from your employer, federal payments like Social Security, or if you are an independent contractor, accounts receivable. Bank levies are one-time events. The IRS freezes assets in an account up to the amount owed plus interest for 21 days then takes those funds to repay your debt. The 21-day period is supposed to allow for resolving account ownership. Property seizures constitute the most extreme use of a levy, allowing the IRS to actually take and sell your property. This could be a car, or a boat, even a house. Again, this is not terribly common and usually only used in extreme cases. A levy is an active form of collections, and a taxpayer must be sufficiently warned before the IRS will undertake any type of levy. Generally, they mail several notices with one final 30-day notice. This 30-day period is your window to take action to resolve the debt, or make an appeal. I recommend taking action as soon as the first notice arrives. Fighting a levy takes time for even the most experienced tax attorney or CPA. A lien, on the other hand, is a passive form of collections. Tax liens essentially “lock” your property (whether a car, or a home, even artwork and jewelry) so that should you sell it, the IRS gets first crack at the proceeds. I often hear from clients asking, “when can you get my lien released?” And the honest answer is, when the debt is paid or expired. You cannot argue to have a lien removed; tax liens stay in place until the debt is repaid in full or expires. Even if you enter into a tax debt resolution with the IRS, such as an Installment Agreement, the lien stays put. This is a security measure protecting the IRS’s interest. However, a tax lien should not impact your life or finances, provided you don’t sell your property.About the Author: The Roni Deutch Tax Center is one of the nation's hottest <a href="http://www.rdtcfranchise.com">income tax franchise</a>. <a href="http://www.rdtc.com">Income tax preparation</a> is a recession resistant industry. Learn more about this new tax franchise opportunity today.Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/taxes-articles/whats-the-difference-between-a-tax-lien-and-levy-992059.html" title="What’s the Difference Between a Tax Lien and Levy?">What’s the Difference Between a Tax Lien and Levy?</a>

The term “levy” is used to describe a number of collection methods the IRS employs. Levies actually redirect funds to the IRS as a repayment of a debt. Following are a few different types of levies:

Wage garnishments actually fall under the levy heading. Wage garnishments redirect a portion of your income directly to the IRS. A garnishment continues until either the debt is repaid, expires, or you successfully negotiate a release. Wages can be a paycheck from your employer, federal payments like Social Security, or if you are an independent contractor, accounts receivable.

Bank levies are one-time events. The IRS freezes assets in an account up to the amount owed plus interest for 21 days then takes those funds to repay your debt. The 21-day period is supposed to allow for resolving account ownership.

Property seizures constitute the most extreme use of a levy, allowing the IRS to actually take and sell your property. This could be a car, or a boat, even a house. Again, this is not terribly common and usually only used in extreme cases.

A levy is an active form of collections, and a taxpayer must be sufficiently warned before the IRS will undertake any type of levy. Generally, they mail several notices with one final 30-day notice. This 30-day period is your window to take action to resolve the debt, or make an appeal. I recommend taking action as soon as the first notice arrives. Fighting a levy takes time for even the most experienced tax attorney or CPA.

A lien, on the other hand, is a passive form of collections. Tax liens essentially “lock” your property (whether a car, or a home, even artwork and jewelry) so that should you sell it, the IRS gets first crack at the proceeds. I often hear from clients asking, “when can you get my lien released?” And the honest answer is, when the debt is paid or expired. You cannot argue to have a lien removed; tax liens stay in place until the debt is repaid in full or expires. Even if you enter into a tax debt resolution with the IRS, such as an Installment Agreement, the lien stays put. This is a security measure protecting the IRS’s interest. However, a tax lien should not impact your life or finances, provided you don’t sell your property.

The Roni Deutch Tax Center is one of the nation's hottest income tax franchise. Income tax preparation is a recession resistant industry. Learn more about this new tax franchise opportunity today.

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