If you’re reading this, there’s a good chance you’ve received one of those dreaded notices from the IRS. Interaction with the Internal Revenue Service is pretty common—especially during tax season. But if you’ve been notified of an IRS tax lien or levy, things just got a whole lot more serious.
The most important thing to do right now? Stay calm. Yes, these notices mean your financial life just took a turn for the complicated, but you have rights—important ones—that are worth protecting.
❓ What Is an IRS Tax Lien?
An IRS tax lien is a very specific type of claim that the government (in this case, the Internal Revenue Service) makes on your property. That property can include but is not limited to real estate and other types of assets. Typically, this is something that occurs when you’re past due on your income taxes and you’ve failed to make proper arrangements to get yourself back up to date again.
A tax lien can affect you in a number of different ways, all of which are less than ideal. Even though tax liens no longer appear on your credit report, your credit rating will still suffer ‒ thus harming your ability to get a loan or secure new credit for your business. Tax liens also usually appear during title searches, which can impact your ability to sell your house or refinance the mortgage you already have.
❓ What Is an IRS Tax Levy?
A tax lien is essentially the first part of a two-step process. That second step takes the form of a tax levy, which involves the actual seizure of the property in question in an effort to pay the tax money you owe. Via a tax levy, the IRS can do everything from garnish your wages, seize assets like real estate or even take control of your bank accounts to get their money.
At the very least, you’re likely to go through wage garnishment ‒ meaning that you’ll be taking home far less money at the end of the week in your paycheck. A 21-day hold might be placed on your bank account in an effort to encourage you to “work things out,” and if you don’t, they may even try to seize your home as a last resort.
Luckily, there are a few things that the IRS CAN’T seize even by way of a tax levy. These include things like unemployment benefits, certain pension benefits, disability payments, workers’ compensation, and others.
❓ What Can I Do About It?
If you can pay your tax bill, do it. If you can’t, set up an IRS payment plan to keep things manageable. Yes, interest and penalties will keep adding up, but it’s better than losing your house.
You also have rights. If you feel the IRS is treating you unfairly, you can file an appeal with the IRS Office of Appeals or request a meeting with a higher-level agent. You can also apply for a Withdrawal of the Notice of Federal Tax Lien or a Certificate of Discharge if your property is on the line.
In situations like these, it’s easy to feel overwhelmed. But you don’t have to go it alone. Working with a seasoned tax professional can help you navigate the IRS and protect your assets.
Need Help?
Dealing with IRS notices is never fun, but you’re not alone. If you need help understanding your options or negotiating with the IRS, our team of tax experts is just a call away. Let’s get your financial peace of mind back on track—starting today!