What’s the difference between levy and lien?

The IRS defines a levy as “a legal seizure of your property to satisfy a tax debt”. A levy can actually take property, like wages or money in the bank, to satisfy the tax debt. A tax lien is a claim used as security for the tax debt.

How the IRS issues a levy?

A levy will only be issued after three requirements are met:

• The IRS assessed the tax and sent you a Notice and Demand for Payment;
• You neglected or refused to pay the tax; and
• The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A hearing (levy notice) at least 30 days before the levy.
• Three Ways To Avoid IRS Levies

Usually, the IRS will start sending notices about six weeks after the taxpayer files a return with taxes owed on it. If the taxpayer neglects or refuses to pay the balance owed after receiving the last notice, a Final Notice of Intent to Levy, the IRS can levy the taxpayer’s income and assets including wages and bank accounts.

If taxpayers owe the taxes, there are several ways to avoid or remove the hammer of the IRS tax levy.How to avoid a levy?

1. Request a 120-Day Extension

One common solution is to request a 120-day extension to pay the balance in full and avoid a levy. Once you have made payment, the IRS will release the tax lien, if field, within 30 days, and automatically cancel the tax levy.

2. Request an Installment Agreement

If the taxpayer can’t pay in full with an extension, an installment agreement allows the taxpayer to make monthly payments. An IRS Installment Agreement is a program which allows individuals to pay tax debt in monthly payments, instead of paying their tax liability all at once. Once this is requested, the IRS will not issue a levy unless you default on this agreement.