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When federal taxes remain unpaid, the IRS may use collection tools such as federal tax liens and levies. Although these terms are often confused, they have different legal meanings and consequences.
Understanding the distinction is important when evaluating your options.
A federal tax lien is the government’s legal claim against your property after a tax debt remains unpaid and proper notice has been issued. A lien attaches to:
• Real estate
• Personal property
• Financial accounts
• Business assets
• Future-acquired property
A lien does not immediately result in seizure. However, it may:
• Complicate the sale or refinancing of property
• Affect priority among creditors
• Remain attached until the liability is resolved or otherwise released
The IRS may issue a Notice of Federal Tax Lien to publicly document its claim.
Depending on the circumstances, taxpayers may qualify for:
• Lien Release – Issued after the tax debt is fully satisfied or legally discharged
• Lien Withdrawal – Removes the public notice of lien under qualifying conditions
• Lien Subordination – Allows another creditor to move ahead of the IRS lien
• Lien Discharge – Removes the lien from a specific property (often during sale or refinance)
Eligibility depends on IRS criteria and financial circumstances.
A levy is an enforcement action that allows the IRS to seize property to satisfy unpaid tax debt. Unlike a lien (which is a claim), a levy involves actual collection.
Examples of levy actions include:
• Freezing funds in a bank account
• Garnishing wages
• Seizing certain assets
In bank levy cases, financial institutions are generally required to hold funds for 21 days before transferring them to the IRS. This period may allow the taxpayer to request relief or demonstrate hardship.
Before issuing most levies, the IRS must provide a Final Notice of Intent to Levy and inform the taxpayer of their right to request a Collection Due Process (CDP) hearing.
A timely CDP request:
• Suspends most levy action
• Allows review of collection alternatives
• Provides the opportunity to propose installment agreements, Offers in Compromise, or other solutions
Deadlines for requesting a hearing are strict.
Under IRS administrative initiatives commonly referred to as “Fresh Start” programs, certain taxpayers may qualify for lien withdrawal after entering into a qualifying installment agreement and meeting specific compliance requirements.
Eligibility thresholds and requirements are subject to IRS policy updates.
Depending on the facts of your case, options may include:
• Installment Agreement
• Offer in Compromise
• Currently Not Collectible status
• Hardship relief
• Bankruptcy protections (in qualifying cases)
• Collection Due Process hearing
Each option depends on individual financial circumstances and compliance history.
If you have received a Notice of Federal Tax Lien or a levy notice, Tenina Law can review your situation and explain your available legal options.
We assist taxpayers with lien withdrawals, levy releases, payment plans, and other tax collection matters involving the IRS and California tax authorities.
Consultations are provided at no charge. Representation terms are discussed in advance.
Attorney licensed in California with over 20 years of legal practice in civil litigation, tax law, bankruptcy, and corporate matters. Each case is evaluated on its facts and applicable law.
We provide personalized attention, clear communication, and ongoing case evaluation. Client experiences vary based on the circumstances and results depend on case-specific facts and applicable law.