Tax Liens & Levies: Q&A with The Tax Lawyer

The IRS has been given tremendous power to determine what taxes you owe based on the law and information provided either through your tax return or through the research and findings of IRS auditors. Once the IRS decides how much you owe, the IRS collection department is empowered to take a variety of aggressive tax collections actions including filing a tax lien or a tax levy against you.

What is a Tax Lien?

A tax lien is a lien placed on property for the payment of taxes due. The IRS can obtain a tax lien against a taxpayer for failure to pay taxes. The lien may attach to real property or personal property. Once it has a tax lien, the IRS has the power to seize a taxpayer’s real or personal property and sell the property to satisfy the taxes owed.

How Can the IRS Get a Tax Lien?

In order to obtain at tax lien, the IRS (or other agency) must satisfy certain specific requirements. First, the IRS must demonstrate that a tax has been properly assessed against the taxpayer and has demanded the payment of the tax from the taxpayer. The IRS must also show that the taxpayer has failed to make the payment. The tax lien attaches automatically once the IRS can make this demonstration.

What is the Difference Between a Federal Tax Lien and Statutory Tax Lien?

A federal tax lien is covered under Internal Revenue Code §6321 and it is also commonly referred to as a statutory tax lien. It is also sometimes referred to as a silent lien or secret lien because once it attaches it is known only to the IRS and the taxpayer.

The federal tax lien creates a legal claim to the taxpayer’s property, including any property acquired after the creation of the lien. Once the lien is created, the IRS will not release it until all taxes, penalties, and interest in paid in full, or the IRS legally is no longer able to collect it. If the taxpayer and the IRS reach an Offer in Compromise or Installment Agreement for the payment of the taxes, the lien will be released.

Can the IRS Levy my Bank Accounts or Wages?

Yes, the IRS can use a levy to collect taxes. Once the lien has attached, the IRS has the power to levy a taxpayer’s wages, bank accounts, Social Security benefits, or even their retirement income. In addition, the federal tax lien allows the IRS to seize a taxpayer’s real or personal property, sell the property, and apply the proceeds to the tax debt.

The tax lien itself does not cause the transfer to occur. Instead, the IRS must follow certain procedures in order to have the legal right to levy or seize the taxpayer’s property. Specifically, the IRS must mail the following information to the taxpayer: 1) a notice of the tax amount due; 2) a demand for payment; 3) notice of intent to levy the taxpayer’s bank accounts, wages, and the like; and 4) notice of the taxpayer’s right to pursue a due process hearing. It is also important to note that the IRS cannot levy any of the taxpayer’s assets during the 30-day period between the notice of intent to levy, and notice of the due process hearing.

A Tax Attorney Can Help Prevent Your Property from Being Seized or Levied

Unlike an ordinary creditor, the IRS has the power to levy your bank accounts and other assets merely by complying with certain procedural requirements. The IRS does not have to file a lawsuit and wait for a judgment. However, there are some protections available to taxpayers facing an IRS levy. An experienced tax attorney can help you fight the IRS’s seizure or levy of your property by engaging in negotiations with the IRS and taking strong offensive steps to protect your rights.

The Tax Lawyer - William D Hartsock has been successfully helping clients stop tax liens and levies since the early 1980's. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case. To schedule your free consultation simply fill out the contact form found on this page, or call (858)481-4844.