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What is the difference between a Tax Lien and a Tax Levy?

A tax lien and levy are both government-imposed tax penalties thrust on taxpayers as a punishment for their non-payment of taxes. When you fail to pay your taxes, you owe the federal government and they immediately begin to seek ways to get their money from you. even though both tax liens and levies are unpleasant ways that the IRS gets even with taxpayers, they are not the same, and understanding the difference between a tax lien and a tax levy is a vital step towards becoming tax-literate.

Owing money to the federal government gives the IRS legal rights to employ diverse means of trying to get payments from you. If you do not take immediate action by educating yourself properly, you may fall victim to unforeseen IRS penalties that will likely deal a heavy blow on your finances.

The method of tax collection that you will be subjected to by the IRS largely depends on your unique tax situation. Some tax debts attract tax liens and some others attract a tax levy. It is pertinent to understand both these terms (tax levy and tax lien), especially if you are on the verge of getting one leveled against you.

The Major Difference Between a Tax Lien and a Tax Levy

A tax levy is a situation where your property or assets are legally seized to settle a tax debt. Usually, you will be notified in writing when a levy is about to be placed on your assets or properties.

This is usually employed as a last resort by the IRS to get delinquent taxpayers to pay up their taxes. Any of your properties or assets can be placed under an IRS tax levy but the ones that are mostly affected include your retirement accounts, wages or salaries, checking and savings accounts, etc. Your physical properties such as your cars and houses may also be affected by a tax levy.

A tax levy is largely similar to a property seizure or a wage garnishment. However, the IRS is prohibited by law from levying certain types of assets like your trade tools, unemployment benefits, household goods, workers’ compensation, or any kind of assets or source of income you require to make a living or survive during hard times or illnesses.


A lien, on the other hand, is a legal claim over your property. It is used as security Or collateral over your tax debt. The difference between a tax lien and a tax levy is that in a tax lien, your assets are not seized. The IRS just has claims on them that protect your current and future assets and means that the IRS gets the first share if the asset is sold or leased out. Unlike in a tax levy, a tax lien does not involve the seizure of your property towards the resolution of your taxes.

Do you have further questions about the difference between a tax lien and a tax levy? Has a tax levy or lien been filed against you? Reach out to us now by simply filling out our contact form.


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