Tax Liens And Levies: Understanding And Dealing With IRS Collection Actions

When faced with the intimidating world of taxes, many individuals and businesses may feel overwhelmed, especially when confronted with terms like “tax liens” and “tax levies.” The Internal Revenue Service (IRS) has been assigned the vital responsibility of collecting federal taxes. Inevitably, this means pursuing individuals and businesses that have unpaid tax debts. The methods they employ can be daunting, but with understanding and proactive measures, these challenges can be faced head-on.

To better equip you for such situations, we delve into the intricacies of tax liens and levies and offer guidance on how to address them. Knowledge is power, and understanding these collection tools is the first step to successfully navigate potential challenges with the IRS.

1. Distinguishing Between Tax Liens And Tax Levies

Before diving deeper, it’s crucial to differentiate between tax liens and tax levies.

  • Tax Liens: A tax lien is a legal claim against a taxpayer’s property, asserting the government’s right to the taxpayer’s assets if they fail to pay their tax debt. This claim exists as a public record and can hurt the taxpayer’s ability to get credit.
  • Tax Levies: A tax levy, on the other hand, is the actual seizure of assets to satisfy the tax debt. This could include wage garnishments, the confiscation of bank accounts, or even the selling of physical properties like homes or cars.

If you’re facing a tax lien or the threat of a levy, it’s essential to consult professional help. Tax Law Advocacy services are equipped to guide you through the intricate maze of tax regulations, assisting you in understanding your rights and suggesting potential courses of action.

2. Preventing Liens And Levies

The most effective strategy is always prevention. Make it a practice to:

  • File On Time: Even if you can’t pay your entire tax bill, filing your tax return on time can prevent additional penalties and interest.
  • Set Up Payment Plans: The IRS offers installment agreements for taxpayers who can’t pay their taxes in full. These arrangements allow taxpayers to make monthly payments over time.

3. Addressing Tax Liens

If you find yourself subject to a tax lien, consider the following steps:

  • Pay the Debt in Full: This is the quickest way to release a tax lien. Once paid, the IRS will usually release the lien within 30 days.
  • Subordination: This doesn’t remove the lien but allows other creditors to move ahead of the IRS, making it easier for the taxpayer to get a loan or mortgage.
  • Withdrawal: This removes the public notice of the federal tax lien, and assures the government that the tax will be paid.

4. Handling Tax Levies

Tax levies require more immediate attention as they result in direct actions like wage garnishments or asset confiscation. Here’s what you can do:

  • Appeal the Levy: Taxpayers have the right to receive a written notice at least 30 days before the levy. During this period, they can appeal the action.
  • Release Through Payment: Similar to liens, paying off the debt is the surest way to stop a levy.
  • Modify or Terminate an Installment Agreement: If a taxpayer is in default of an agreement, they can renegotiate or seek a new agreement to halt the levy process.

5. Rights Of Taxpayers

The IRS must adhere to specific regulations to protect taxpayer rights:

  • Notice: The IRS must provide taxpayers with a written notice before levying any assets.
  • Right to a Hearing: Taxpayers have the right to request a hearing with the Office of Appeals, disputing the amount owed or the levy itself.
  • Redemption: In cases where property is sold, taxpayers can regain their property if they can match the selling price and cover any associated costs within 180 days of the sale.

6. Seek Professional Guidance

As with many complex financial matters, consulting professionals can offer immense value:

  • Tax Professionals: These experts can help negotiate payment plans or offers in compromise, which might reduce the overall debt.
  • Tax Attorneys: They specialize in tax law and can be invaluable, especially if legal action or intricate negotiations are necessary.


Facing IRS collection actions like tax liens and levies can be daunting. However, with understanding, preparation, and the right professional assistance, these challenges become manageable. 

Remember, while the IRS’s primary goal is to collect owed taxes, they are also bound by regulations designed to ensure fairness and protect taxpayer rights. By staying informed and proactive, taxpayers can find solutions that mitigate the impact of these collection actions and navigate their financial future with confidence.