Lien vs Levy
Taxation is the financial charge which is imposed upon individuals, businesses, corporations, or other legal entities by a government. It is paid in money which is then used by the government in the performance of their functions, such as the protection of property, economic infrastructure, and the enforcement of law and order.
Failure to meet a tax requirement or to pay taxes is punishable by law, and governments have the authority to issue a tax levy or tax lien on people who fail to pay their taxes. These are carried out by the Internal Revenue Service (IRS).
Every citizen of a country is subjected to a tax lien by their government. It is taken on an individual’s real or personal property to secure the payment of his taxes. In a way, the citizen becomes a debtor and the government the creditor which gives it the right to take the property or the proceeds of its sale if the taxpayer fails to pay taxes.
The lien will be released when the taxpayer has already paid what he owed the government in taxes. It will take 30 days before the taxpayer receives a copy of the certificate of Release of Federal Tax Lien.
A tax levy, on the other hand, is the government’s administrative act of seizing an individual’s property or income, such as his salary and his money in the bank, as payment for his taxes. The government does not need any court orders to execute a tax levy.
However, it requires that a Notice of Intent to Levy is issued 30 days prior to the seizure of the assets. Once it is issued, the only option would be to pay the taxes in full or agree to a compromise. If the taxpayer can prove economic hardship, or if he can post a bond, the tax levy can be lifted. He can also ask the IRS to let him pay his taxes in installments or partially. Otherwise, the taxpayer might be forced to file for bankruptcy.
Usually, a tax lien precedes a tax levy. While a tax levy does not have to be filed in court, a tax lien must have to be filed in court. In order to prevent any of these from happening, it is best to pay taxes diligently.
Summary:
1.A tax lien is issued by a government to its citizens as a form of security for the payment of his taxes while a tax levy is issued by a government to seize an individual’s assets when he fails to pay his taxes.
2.A tax lien needs to be ordered by a court while a tax levy does not need a court order.
3.A Notice of Intent to Levy is needed to be given to the taxpayer 30 days before a tax levy is issued while a tax lien is issued without any notice.
4.A tax lien is usually taken on real and personal property while a tax levy is taken on assets such as bank accounts and salaries.