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What’s the difference between a lien and a levy?

| Aug 31, 2020 | IRS

People who owe money to the Internal Revenue Service (IRS) will often try to get it paid as quickly as possible. Most individuals know how serious the consequences are if you don’t pay and just ignore the IRS. This is a ruthless agency that’s going to do anything within its power to get the money that you owe.

When you don’t pay the IRS, the agency can place a lien on your assets. This is a federal lien that is a public record. Creditors will know that the IRS has made a claim against your property. This can have negative impacts on your credit report. It can make it difficult to get credit extended to you.

After the IRS places the lien on your assets, it has the option to levy the assets. This gives the agency the ability to seize the assets and sell them to satisfy the debt you have to it. The only way that you can prevent the IRS from doing this is to settle the debt or pay it off.

It’s often possible to work out a plan with the IRS to get a tax debt paid before any extreme collection measure is taken. If you know that you owe this agency, work with a tax attorney to find out what options apply to your case. This could help you to avoid liens, levies or potential criminal charges. Just don’t waste time in getting the help you need. Ignoring the letters the IRS sends can lead to significant legal issues and challenges during the collections process.