Home > Blogs > LLOYD CONLEY MBA ENROLLED AGENT > Tax Help in The Woodlands, Houston & Texas

HOUSTON, TX: TAX LIEN VS TAX LEVY! WHAT'S THE DIFFERENCE?

By LLOYD CONLEY MBA ENROLLED AGENT

Services for Real Estate Pros with CONLEY CONSULTING LLC ENROLLED AGENT

August 27, 2019 04:25 PM

Lloyd Conley, EA, represents business and individual taxpayers in The Woodlands, Houston, Texas and throughout the USA who have civil issues with the IRS.

Many taxpayers are confused about the difference between a Tax Lien and a Tax Levy! There is a major difference!

A Tax Lien is essentially a public record recorded at a local courthouse making a first or priority claim against (The Lien) a taxpayers significant assets, real estate, business, etc. The IRS will do this when a taxpayer, business or individual, has an outstanding tax liability that is past due. This will occur when a taxpayer enters into an Installment Agreement with the IRS to pay back taxes.

Liens are hard for the average taxpayer to get removed, even after the taxes are paid. Professional help is best to get the lien removed as quickly as possible. The big problem with liens is that they are a major inconvenience to a pain-in-the-neck. They will also have a negative impact upon a credit score, although not usually severe in comparison to other factors, like late bill payments or the utilization of a high percentage of an individual’s lines of credit on credit cards. That's about as severe as the damage gets.

A Tax Levy, on the other hand, can be quite severe! A Tax Levy is an action to seize property to settle a tax debt. This could involve the unexpected:

Seizure of checking account funds!
Garnishment of wages!
Seizure and sale of real property to settle a Tax Debt!
Seizure of accounts receivable directly from Clients and Customers.

Obviously, a Tax Levy is far more severe than a Tax Lien and can be very painfully disruptive to a taxpayer's life.

What is an effected taxpayer to do? Here are two suggestions:

Never ignore a letter of any kind from the IRS! The IRS must execute a series of procedures by law to ensure that taxpayers have every chance to respond and address tax deficiencies. Make sure you give yourself the benefit of the time allowed to address taxes due with the IRS. If a taxpayer is surprised by a Tax Levy, it's because they have ignored IRS correspondence or moved without securing proper forwarding of mail.
Get professional help! Don't try to negotiate with the IRS on your own. Find a Tax Representation expert, like an Enrolled Agent or a Tax Attorney. CPAs are authorized to represent taxpayers before the IRS, but not many will. Only attorney's can represent taxpayers in criminal matters.
1. 3.As a real estate professional, refer clients with such problems to a Tax Representation Professional to help clear the liens and levys so that real estate can be acquired or sold!