Tax Liens and Levies
When the IRS or California tax authorities file a tax lien or issue a levy against your property, wages, or bank account, immediate action is required. NewPoint Law Group's Roseville tax attorneys work to release or discharge liens, stop levies, and negotiate resolutions that protect your assets and restore your financial stability.
IRS Tax Liens and Levies | Tax Attorneys in Roseville, CA
Understanding Tax Liens
A federal tax lien arises automatically when a taxpayer neglects or refuses to pay a tax liability after demand from the IRS. The lien attaches to all of the taxpayer's property — real property, personal property, and financial assets — and secures the government's interest in that property. The IRS files a Notice of Federal Tax Lien (NFTL) in the county recorder's office to establish priority against third-party creditors.
A filed tax lien damages credit, can prevent refinancing or selling real property, and can complicate business operations. California tax agencies can similarly file state tax liens that create equivalent problems at the state level.
Understanding Tax Levies
A tax levy is the actual seizure of property to satisfy a tax debt. Whereas a lien is a legal claim, a levy is an enforcement action. The IRS can levy wages (requiring employers to withhold a substantial portion of each paycheck), bank accounts (freezing and seizing funds up to the amount owed), accounts receivable, retirement accounts, and even physical property such as real estate or vehicles.
Before levying, the IRS must provide the taxpayer with a notice of intent to levy and a right to a Collection Due Process (CDP) hearing. This hearing is a critical opportunity to stop collection action and explore alternatives.
Resolving Liens and Levies
Lien Release: The IRS releases a lien when the tax liability is fully paid or becomes legally unenforceable.
Lien Discharge: Removes the lien from specific property to allow a sale or refinancing, even if the underlying liability is not fully resolved.
Lien Subordination: Makes the federal tax lien secondary to another creditor's lien, facilitating financing.
Levy Release: Releases a wage or bank levy based on demonstrated financial hardship, establishment of an installment agreement, or other resolution of the underlying liability.
Collection Due Process Hearings
If you receive a CDP notice, you have 30 days to request a hearing with the IRS Independent Office of Appeals. At the hearing, you can raise collection alternatives (installment agreement, OIC, currently-not-collectible status), challenge the appropriateness of the proposed action, and in some cases raise issues about the underlying liability. Missing the CDP deadline significantly limits your options.