Tax Liens and Levies
WHAT IS A TAX LIEN?
Federal and state tax liens are the government’s legal claim against your property when you owe back taxes. A notice of your delinquent tax debt is filed by the tax authorities with your county recorder’s office.
WILL A TAX LIEN AFFECT MY CREDIT?
Prior to April 2018, liens were reported by the credit bureaus; however, due to policy changes, as of April 2018, all three major credit bureaus no longer report tax liens. As a result of this change, liens will no longer affect your credit report or credit score. However, lenders, employers and landlords can still search elsewhere, including your county recorder’s records to determine if you have tax liens.
WHAT IS A TAX LEVY?
Federal and state tax levies are legal seizures of your assets, which includes money and property. This enforced collection action is taken against taxpayers who owe back taxes and have not established or maintained an agreed upon payment arrangement, or who have not been determined to be in a financial hardship.
Levies are often seen in the form of bank and wage garnishments, federal and state tax refund seizures, and accounts receivable seizures if you own a business. Prior to being levied, the IRS is required to send you a final notice of intent to levy, which is typically sent to you in the mail at least 30-days before a levy takes place.
HOW WILL A TAX LEVY AFFECT ME?
Levies directly affect your cash flow, which can impact your ability to pay bills and enjoy the quality of life you’ve become accustomed to living.
Wage Levies: The IRS will send a wage levy notice to your employer, who is then legally required to garnish your wages as described in the notice. A wage levy will continue until the levy is released, the tax debt is paid off or a resolution has been established.
Bank Levies: When the IRS sends your bank a levy notice, the bank will put a 21-day hold on all the money that is in your account at the time the notice is received. Unlike a continuous wage levy, the bank levy is a one-time event. After the 21-days, the bank will turn the money over to the IRS, unless a resolution has been established.
Preventing and releasing liens and levies is a priority, as we understand how crippling these actions can be for clients trying to get loans, pay bills and simply live in peace.
If a lien or levy has not already been issued, we work with the tax authorities to give us a reasonable amount of time to help you meet any compliance requirements, thus preventing harmful collection enforcement. If liens or levies have been issued, we work quickly to determine and implement strategies to have them released immediately.