What Is The Difference Between A Tax Lien and Tax Levy?

What Is The Difference Between A Tax Lien and Tax Levy?

If you owe back taxes, tax liens and tax levies can negatively affect you, your income, and your personal assets. If you’re at risk, Paramount Tax Relief encourages you to learn the differences between the two and the impacts they can have.

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What is a Tax Lien?

A tax lien is a legal claim against your property, including real estate and other assets, when you’re past due on your income taxes. If you owe back taxes and you’re faced with a tax lien, here’s what could happen next:

  • Although tax liens may not appear on credit reports anymore, the IRS can still file a public notice of the tax lien that tells creditors the government has a right to your property.
  • A tax lien can jeopardize home sale or refinancing. If you have equity in a house you’re trying to sell or refinance, you’ll likely have to use part of it to pay your taxes in order to close.
  • It can cost you a lot of your personal time to remove a tax lien. Some taxpayers might even be assigned to a revenue officer, which could mean in-person visits.

What is a Tax Levy?

A tax levy is the actual seizure of property to pay off the owed taxes, and generally happens after a tax lien. Tax levies can include garnishing your wages or seizing assets and bank accounts. Here’s how a tax levy could affect you:

  • Wage garnishment is a typical tactic, which means the IRS will order your employer to hand over some of your income with every paycheck.
  • Your bank accounts can freeze. Usually, the IRS will contact the bank and place a 21 day hold on your account. If matters aren’t resolved with the IRS after that time, the bank may send some or all of your money to the IRS.
  • Your house could ultimately be in jeopardy.

What Can’t Be Seized in A Tax Levy?

Although your wages, bank account, and house are at risk with a tax levy, the IRS cannot seize the following:

  • Unemployment benefits
  • Certain annuity and pension benefits
  • Certain disability payments
  • Workers’ compensation
  • Some public assistance payments
  • Child support payments
  • Necessary schoolbooks and clothing
  • Undelivered mail
  • Certain amounts of fuel, provisions, furniture and household items
  • Certain books and tools for work

Receive Tax Lien or Tax Levy Help in Sacramento

When you owe back taxes to the IRS, it can certainly seem stressful to overcome. Fortunately, our tax professionals in Sacramento are here to help give you the tax relief you need. If you’re faced with a tax lien or tax levy, we will help to resolve the issue or negotiate to provide you with the best possible outcome.

Contact our team at Paramount Tax Relief in Sacramento today. We stand by our commitment to put you in a better situation!

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2019-06-04T20:16:01+00:00 June 4th, 2019|
Paramount Tax Relief

Paramount Tax Relief