Lien and Levy Removal

The Federal Tax Lien

A Federal Tax Lien gives the IRS a legal claim on property for payment of a tax debt. The lien is created by statute and automatically attaches to the property of any taxpayer after a demand for payment is made by the IRS. This lien is sometimes referred to as a silent or secret lien because it happens automatically and the public is not notified of the lien. So, in order to maintain its rights over other creditors, the IRS will usually issue a Notice of Federal Tax Lien that puts the public on notice of its lien.

Opposing a Federal Tax Lien

Normally, within 5 days after the IRS issues a Notice of Federal Tax Lien, they will notify the taxpayer who can then request a manager's meeting, a collection due process hearing (or CDP hearing), or a collection appeal. In all cases, the taxpayer will be provided with an opportunity to contest the initial findings of the IRS employee who made the negative determination and in some cases the taxpayer can appeal that decision to the Tax Court.

Releasing an IRS Tax Lien

The IRS will release a lien if the taxpayer can show that the Notice of a Federal Tax Lien was issued in error. There are several grounds that may constitute an error such as the IRS identified the wrong taxpayer, the debt was not actually owed, or the required procedures were not followed. A taxpayer may be able to recover damages from the IRS if they negligently fail to issue a Certificate of Release of Federal Tax Lien or Certificate of Discharge when required under law.

The IRS Levy

A Levy is where the IRS takes property into their possession and away from the taxpayer; whereas a lien is only a claim to property. The IRS can levy on property by taking such things as your wages, bank accounts, cars, boats, houses, etc. Just like when appealing a lien, a taxpayer can appeal the IRS' levy action.

The IRS will release the levy when the taxpayer can show that the levy was wrongful or will cause economic hardship. A levy could be deemed wrongful because you did not owe the tax debt, the IRS has the wrong taxpayer, the required notices were not sent, or the levy was issued when an appeal was pending, etc.