What is the difference between an IRS tax levy, and an IRS tax lien?

A tax lien is a document filed in a public place such as a County Recorder’s Office or the Secretary of State which is a notice that you owe taxes.  A tax lien generally lists the amount of the taxes owed, the type of tax and even the years for which taxes are owed. The tax lien will be picked up by the various credit reporting agencies, and will cause significant credit problems. If you own real property, and try and sell it, the IRS will be paid the equity in your property. The tax lien does not, however, take any money out of your bank account.

A tax levy is not available for the general public to see, and does not by itself effect your credit rating, or prevent you from selling your property. However, if the IRS serves a tax levy on your bank then it is required by law to send all of your money to the IRS. If the IRS sends a tax levy to your employer it is required to send your paycheck to the IRS minus a very small amount which is exempt. If you would like to see how little of your paycheck is exempt from an IRS tax levy see IRS publication 1494.

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