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IRS & STATE LIENS, LEVY’S & GARNISHMENTS
IRS and State Issued Liens
A lien is a charge against property making it security for the payment of the tax debt. In other words, the IRS or State will put a lien against property you own so the property cannot be transferred unless the tax debt is satisfied by the proceeds. A lien is usually publicly recorded and will show on the credit report, as well as title reports. When applying for a loan the lender will be made aware of the lien and will either want the lien released before going forward or will be obligated to pay the debt with any loan proceeds you are approved for.
Liens are difficult to remove without the debt being paid in full. The IRS or State will have to give you notice of a pending lien before placing the lien. Once notice has been received arrangements should be made to either pay the debt in full or arrange an installment plan before the lien is recorded.
Levy’s
A Levy differs from a lien in that a levy is actual seizure of the property. If a Levy is put on your bank account, all funds (up to the amount owed) can be deducted from your account and sent to the IRS or State to satisfy the debt. However, a levy is only valid on the date of issuance. The government agency can only pull from the available funds on the specific date of issuance – it does not continue indefinitely. The agency can continue to issue new levies until the debt has been satisfied or other payment arrangements made.
Once a levy has been placed against your account you will not be able to get the money back unless you file tax returns showing you are due a refund. The IRS and State give notice well in advance before issuing a levy. Once notice has been received that a Levy will be placed payment arrangements should be made to avoid the levy.
Garnishments
A garnishment refers to a potion of your wages being deducted from your paycheck and forwarded to the IRS or State. A garnishment continues until the debt is satisfied in full or other payment arrangements are made.
Total Tax Solutions can make payment arrangements and settle tax debts. Garnishments and Levy’s can be released once these arrangements have been made. Call us for more information.
