Did you know that the Internal Revenue Service (IRS) can take action against you if you don’t pay your taxes? There are two main ways that the IRS can recover what you owe them: a Tax levy and a Tax Lien.
Both can have serious financial consequences, so it’s important to understand the difference between the two. So, what’s the difference between these two methods? Read on to find out (Tax Levy vs Tax Lien) the key difference.
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IRS Tax Levy vs. IRS Tax Lien
A tax levy is a legal claim on your property, which allows the IRS to seize and sell your assets in order to pay off your tax debt.
A tax lien, on the other hand, is a legal claim on your property that gives the IRS the right to collect any unpaid taxes from the proceeds of its sale.
Tax liens can also potentially damage your credit score.
Which is Worse: Tax Levy vs. Tax Lien?
That depends on your individual situation. If you have equity in your property, a tax levy may be more detrimental, as it could result in the loss of your home or other assets.
However, if you don’t have much equity, a tax lien could still have a major impact on your finances, as it will make it difficult to get new loans or lines of credit.
The best way to avoid either a tax levy or a tax lien is to pay your taxes on time and in full.
If you’re having trouble doing so, contact the IRS immediately to discuss your payment options.
Tax debt can be difficult to manage on your own, but there are resources available to help you get back on track.
Final Thoughts
In this article you learned that: A levy is when the government takes your assets to pay off your debt.
A lien is a legal claim on your property until you repay your debt.
So, now that you know the difference between a tax levy and a tax lien, do you know you can get taxpayer advocates help and resolve these issues.
You can fill our form 911 and get help.
If you want to learn more about the differences between levies and liens, or if you have other questions about taxes, continue reading our blog.
