Overview: Learn what the IRS can legally take through liens and levies, the difference between the two, and how to protect your wages, bank accounts, and property.
“Few things are more stressful than getting a notice from the IRS saying they plan to take a part of your income or seize your property. But how far can they really go? The answer depends on whether they’ve placed a lien or issued a levy – and yes, in some cases, they can take your wages, bank accounts, and even your home.
In this article, we’ll break down what liens and levies are, the differences between them, what the IRS can legally take, and the steps you can take to protect yourself.
What is an IRS Lien?
An IRS Lien is the government’s legal claim against your property when you fail to pay a tax debt. According to the IRS, a lien protects the government’s interest in all your property – including real estate, personal property, and financial assets.
Key points about liens:
- A lien is not a seizure – it’s a claim against your assets.
- It can affect your credit score and ability to sell or refinance property.
- Liens attach to all your current and future property until the debt is paid in full.
What is an IRS Levy?
An IRS levy is the actual seizure of your property to satisfy a tax debt (IRS Publication 594). This is different from a lien – a lien is the claim; a levy is the taking.
The IRS can levy:
- Wages and salary (also called a wage garnishment)
- Bank accounts
- Social Security benefits
- Vehicles and other personal property
- Real estate, including your home
Can the IRS Take Your Wages or Income?
Yes. Through a wage garnishment, the IRS can take a portion of each paycheck until your tax debt is paid or arrangements are made. The amount they can take depends on your filing status, number of dependents, and standard deduction amount (IRS Form 668-W).
Can the IRS Take your House?
Yes, in rare cases. The IRS can seize and sell your primary residence, but it must first obtain court approval and meet certain requirements under Internal Revenue Code 6334.
Your Rights Before the IRS Can Levy
Before taking your property, the IRS must:
- Send you a Notice and Demand for Payment
- If you don’t pay, they must send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy begins (IRS Taxpayer Bill of Rights).
How to Stop a Lien or Levy
- Pay the tax debt in full (this will remove the lien and levy)
- Set up an installment agreement
- Request an Offer in Compromise
- Apply for Currently Not Collectible (CNC) Status if you can’t pay without hardship
- Appeal the levy within the 30-day notice period
The sooner you respond to an IRS notice, the more options you have. Once a levy in in place, it’s harder to undo – but not impossible.
If you’ve received a lien or levy notice, contact us today. We can help protect your wages and property while working toward a resolution.”
Sources:
- Understanding a federal tax lien
- IRS Publication 594
- IRS Form 668-W
- Internal Revenue Code 6334
- IRS Taxpayer Bill of Rights