IRS Lien or Levy | What's the difference?

July, 08 2025 by Charla Suaste

One of the most common questions we get from taxpayers is, “What is the difference between an IRS lien and an IRS levy?” While the verbiage sounds similar, these terms are not interchangeable and refer to two completely different things.

Let’s discuss the differences between liens and levies and how you can resolve each of them.

 

What is an IRS levy?

A levy is when the IRS seizes property you own to satisfy your tax debt. For example, if the IRS levies your bank account, they will take money out of your bank account. They may even be able to seize the entire balance of that account! If the IRS levies on your physical property, say a house, it's an actual seizure of that physical property where the IRS will lock you out of your home and take possession of the property.

Keep in mind that before the IRS can seize any of your property, they have to send you a Final Notice of Intent to Levy. This allows you the opportunity to go through a Collection Due Process Hearing to dispute the attempted levy. You can also appeal to Tax Court if the Collection Due Process hearing does not result in your favor. We’ll discuss this in more detail below.

 

What is an IRS lien?

An IRS lien is a public document that notifies any creditors that the IRS has a right to your property. For example, if there is a lien on your house and you attempt to sell your home, you won't be able to sell the property until the lien has been satisfied or removed. In other words, the IRS believes that you owe a debt, and until you pay that debt, you will not be able to sell anything that has a lien on it.

Keep in mind that before the IRS can put a lien on any of your property, they have to issue you a Notice of Federal Tax Lien. This allows you the opportunity to go through a Collection Due Process Hearing to dispute the lien. You can also appeal to Tax Court if the Collection Due Process hearing does not result in your favor. We’ll discuss this in more detail below.

 

What is a Collection Due Process (CDP) hearing?

A Collection Due Process hearing is a process that is offered to taxpayers who have received a notice of a lien or a levy notice. This process allows taxpayers to dispute the lien or levy, as well as to propose collection alternatives to the tax that is owed. Collection alternatives could include an installment agreement, requesting your account be placed into Currently Not Collectible status, or entering into an Offer in Compromise.

The most important thing to note about the Collection Due Process hearing is that it must be requested in a timely manner. If you have received a Notice of Federal Tax Lien or a Final Notice of Intent to Levy, you must request the hearing within 30 days of the date on the notice. If you have received either of these notices and disagree with the IRS’ assessment, we recommend requesting the hearing as soon as you receive the letter. This is not something to put on the backburner.

After you request the hearing, an IRS Appeals Officer will be assigned to your case and they will review the facts and circumstances, as well as any collection options you have proposed as an alternative to the lien or levy.

If the IRS Appeals Officer does not accept your proposal, you have another 30 days to appeal their decision in Tax Court, in which a judge will make a final determination.

 

I am overwhelmed by this process. Where should I start?

We understand that anything pertaining to taxes or the IRS can be stress-inducing and time-consuming, so we never recommend going through this process alone. At TaxAudit, we have a Tax Debt Relief team who specializes in handling these types of issues. We have thousands of hours under our belt, navigating these very IRS procedures so that you don’t have to. If you’re not sure you’d like to work with us just yet, you can start with a free, no-obligation consultation. Our team members are tax professionals – not salespeople – so you can have an initial, low-risk conversation to see what we can do for you and determine your best next steps. We’re standing by, waiting to help – so don’t hesitate to give us a call!