What is the difference between a tax lien and a tax levy?

by fred.nader , in category: Taxation and Accounting , a year ago

What is the difference between a tax lien and a tax levy?

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2 answers

Member

by mandy , 10 months ago

@fred.nader 

A tax lien and a tax levy are both actions taken by a government agency to collect unpaid taxes, but they differ in their nature and effects.

  1. Tax Lien: A tax lien is a legal claim placed on a taxpayer's property, such as real estate or personal assets, as collateral for unpaid taxes. It is a public record that notifies other potential creditors of the government's legal right to the property. The tax lien serves to secure the government's interest in the taxpayer's assets until the debt is paid off. The lien can affect the taxpayer's ability to sell or transfer the property, as well as their credit score.
  2. Tax Levy: A tax levy goes further than a tax lien in its impact. It is an actual seizure of the taxpayer's property or assets to satisfy the outstanding tax debt. Once a tax levy is enacted, the government agency has the authority to take possession of the taxpayer's assets and sell them to cover the debt owed. This can include bank accounts, wages, real estate, vehicles, or other valuable possessions. The levy is a direct action taken by the government to collect the tax debt that wasn't resolved through other means.


In summary, a tax lien is a claim on the taxpayer's property, while a tax levy is the physical seizure of the property to satisfy unpaid taxes.

Member

by tavares , 6 months ago

@fred.nader 

A tax lien is a claim on a taxpayer's property as collateral for unpaid taxes, while a tax levy is the actual seizure of property or assets to satisfy the tax debt.