IRS Tax Liens vs. Levies: The Critical Differences You Must Know
Taxpayers often confuse the terms "Lien" and "Levy", using them interchangeably. However, understanding the difference is vital because one is a legal stake in your wealth, while the other is an active seizure of your cash.
A federal tax lien is a legal claim filed against your property—including real estate and liquid financial holdings—to guarantee payment of your debt. It doesn't take your home away directly, but it severely damages your credit profile and locks down your title equity.
A levy, on the other hand, is an outright asset execution. When the IRS enacts a levy, they possess the authority to legally withdraw funds directly from your checking accounts, garnish regular wages, or take possession of properties to settle your account balances.
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