The difference between a lien and a levy
People use the two words interchangeably, and the IRS does not. A federal tax lien arises automatically once a balance is assessed and goes unpaid after demand; the IRS may then file a public Notice of Federal Tax Lien, which attaches to everything you own, including your home, your vehicles and your business assets, and follows the property if you try to sell or refinance it. A lien does not take anything. It makes it very hard to borrow against or sell what you have.
A levy is enforcement. It is the IRS actually taking property to satisfy the debt: freezing and then sweeping a bank account, garnishing wages, seizing accounts receivable from your customers, taking a state tax refund or, rarely, seizing physical property. Before most levies, the IRS must send a Final Notice of Intent to Levy and give you thirty days to respond. That window is the single most important deadline in the collection process, because it carries the right to a Collection Due Process hearing that pauses enforcement while your case is reviewed.
Most of our lien and levy clients come to us at one of two moments: the day the final notice arrives, or the day the bank account is frozen. The first is far better. But even after a levy, there are procedures to get funds released when the levy causes hardship, and to stop the next one.
- Final notice answered inside the window. A timely hearing request stops the levy while the case is reviewed.
- Bank levy release requests. The bank holds funds for 21 days before sending them. We use that window.
- Lien withdrawal, discharge or subordination. Where you qualify, so a sale or refinance can go through.
- The balance behind it, resolved. Payment plan, hardship status, penalty relief or an offer, so the lien and levy do not come back.
- Representation, so the IRS calls us. You do not negotiate with a revenue officer alone.
How we handle a lien or levy
Read the notice, find the deadline
Every IRS collection letter has a number and a date. The number tells us what stage you are at (a CP504 is a warning; an LT11 or Letter 1058 is the final notice with hearing rights) and the date tells us how long we have. This is why we ask you to call with the letter in front of you.
Establish representation and stop the clock
With your authorization on file we contact the IRS, confirm the balance and the pending action, and use the procedures available at that stage, whether that is a hearing request, a levy release for hardship or a direct negotiation with the assigned revenue officer.
Resolve the balance
Liens and levies are symptoms. The balance is the disease. Once enforcement is paused we do the same work as any resolution case: compliance on unfiled years, a financial analysis and the resolution that fits, whether that is an installment agreement, currently-not-collectible status or an offer in compromise. A lien is generally released within thirty days of the balance being satisfied, and can sometimes be withdrawn earlier under a direct-debit installment agreement.
Why clients call Tax Pitbull for liens and levies
We know the calendar
Thirty days, twenty-one days, ten days: the collection process is a series of windows. We keep every one.
Business accounts too
A levy on a business account can stop payroll. We treat those as emergencies.
Selling or refinancing
A lien does not have to kill the deal. Discharge and subordination exist for exactly that.
In Spanish or English
The notice, the options and the plan explained in the language you think in.
Lien and levy questions
Possibly. The bank holds levied funds for 21 days before sending them to the IRS. During that window a release can be requested if the levy creates an immediate economic hardship, if the balance is being resolved, or if the levy was issued in error. Call the day it happens; the window is short.
The major credit bureaus stopped reporting tax liens in 2018, but a Notice of Federal Tax Lien is still a public record that lenders and title companies search. It will surface when you try to refinance, sell property or borrow against business assets.
Yes, with planning. The IRS can issue a certificate of discharge that removes the lien from that specific property, usually in exchange for being paid from the sale proceeds. The application takes time, so tell us before you list the house, not at closing.
It is your right, after a final notice of intent to levy or a lien filing, to have the IRS Independent Office of Appeals review the proposed action and consider alternatives such as a payment plan or an offer. Requesting it on time pauses the levy. It is one of the most valuable tools in the process and it expires thirty days after the notice.
An accounts-receivable levy tells your customers to pay the IRS instead of you. It is disruptive and it is usually a sign a revenue officer is assigned to your case. We contact that officer directly, establish representation and negotiate a release in exchange for a resolution plan. Payroll tax cases often start here.
Pay the balance and the IRS releases the lien within thirty days. Short of that, a lien can be withdrawn if you enter a direct-debit installment agreement on a balance under the IRS threshold and make the required payments, or discharged from a specific property, or subordinated to a new lender. Which one applies depends on your numbers.