A Tax Lien is a document that is recorded with the county in which the taxpayer lives or lived according to the IRS Tax records of last known address. It affects a taxpayer's credit and encumbers all assets and rights to assets. Including real and personal property.
The federal tax lien arises when any "person" liable to pay any federal tax fails to pay the tax after a demand by the Government for payment. IRC § 6321. For federal tax law purposes, a "person" is defined to include individuals, trusts, estates, partnerships, associations, companies, and corporations. IRC § 7701 (a) (1). The lien is effective from the date the Government assesses the tax. Thus, if the taxpayer neglects or refuses to pay the assessed tax, then the lien is deemed to relate back to the assessment date. IRC § 6322. The Service is not required to file a Notice of Federal Tax Lien in order for the tax lien to attach. As discussed later in the text, the Service may file a Notice of Federal Tax Lien in order to have priority over the taxpayer's other creditors.
A Levy is a document that is issued to an income source or any entity that has rights to your personal or real property.
For example, bank for bank account attachment; wage garnishment to employer, levy for seizure for vehicles, equipment, real property, business assets.
Section § 6331 within Title 26 of the US code defines the capacity of the IRS to collect tax through the issuance of a Notice of Levy.
Notices of levy are utilized to attach to equity in any asset owned by the tax debtor. These can be issued to third-parties such as accounts receivable, factors, renter income sources, bank accounts, pension funds, social security income, seizure of any other asset via the appropriate forms and approvals.
Even when confronting lien and levy actions. There are over twenty-six types of IRS processes and procedures to collection of debts that it is impossible to write in an article.
You need a tax professional who has been representing clients for many years in order to hire the right representation. Not all Tax Attorneys, CPAs or Enrolled Agents want to negotiate with IRS Collection or even know how.
The tax debt resolution process and procedures is totally different than representing people or entities with audits and tax preparation. It takes years to be able to identify the right tax debt resolution options available to taxpayers.
Make sure when attempting to hire that you do not hire what is known within the IRS a tax collection mill. There are so many companies that hire salespeople to call tax lien lists to secure clients. However, these companies do not inform the client that they will not initiate any representation until the retainer fees are fully paid. In addition, some are nothing more than scams. BEWARE who you hire.
You can go to Google and find Internal Revenue Manual Part 5 Collection and see the table of contents. This will provide the listing of all the processes and procedures that the IRS takes on to resolve tax debtor cases. Which is the right one for your?