Legal Counsel Regarding IRS Tax Collection Methods: Liens, Levies and Seizures

According to the website debt.org, Americans currently owe $114.2 billion in unpaid taxes.

A lot of tax-owing Americans are able to set up a payment plan, or they may qualify for a temporary payment deadline extension with the Internal Revenue Service (IRS). But many other hard working individuals may be forced to face extreme tax collecting measures taken by the IRS in the form of a lien, a levy, or a seizure.

Understanding the Difference between IRS Tax Collection Methods

When the IRS does not believe that it will be paid, then they may resort to tactics which can place a taxpayer and/or their business in financial peril. The first step the IRS may take is:

Filing A Lien. Liens are used by the IRS to try to enforce collection on a tax debt. Through a lien, the IRS is making a legal claim against property to secure payment of a tax debt. It is the first step in a final attempt to collect taxes which are owed by a taxpayer and it serves as a notification that the IRS thinks that you owe them money. If you do not respond to the IRS lien and resolve the tax debt, you may be penalized and have a levy filed against you.

When Can a Lien Be Filed?

The IRS may potentially file a Federal Tax Lien after it assesses your liability. First, the IRS will send a Notice and Demand for Payment (essentially a bill that tells a taxpayer how much they owe in taxes). If the taxpayer refuses or neglects to pay the full debt, then the IRS may file a lien for the amount of a taxpayer’s tax debt.

  • Filing A Levy: The next step the IRS may take is filing a levy against you. These typically occur when a taxpayer has not been able to satisfy their tax debt or has not addressed the IRS lien within the required amount of time. Levies are the seizure of your property to satisfy your tax debt.

What Does “Subject to Forfeiture” Mean?

The Internal Revenue Code contains only four sections which lists which property is subject to forfeiture. The property they are legally allowed to seize will fall under one or more of the following lists:

  • Section 7301. Property subject to tax
  • Section 7302. Property used in violation of Internal Revenue laws
  • Section 7303. Other property subject to forfeiture
  • Section 7304. Penalty for fraudulently claiming drawback

If your property is not listed in these sections, then it cannot be seized.

What to Do If You Are Facing a Tax Lien, Levy, or Seizure

An IRS tax lien can be withdrawn with the professional guidance of knowledgeable tax attorney, Scott Scammahorn. Your tax attorney will help determine if:

  1. The notice was filed prematurely
  2. The notice was filed not according to IRS procedures
  3. The withdrawal of the notice will expedite the tax collection process
  4. The withdrawal would be in the best interest of both the taxpayer and the government

Your tax attorney will also help you explore your best options, such as whether or not you can appeal the filing of a lien or if you can – and should – apply for the subordination of a Federal Tax lien.

Each and every year thousands of hard working American taxpayers are threatened with stiff penalties by the Internal Revenue Service, and not all penalties are appropriate or even warranted. The Scammahorn Law Firm here in the East Texas area provides confidential evaluations and delivers sound advice regarding how those facing tax difficulties or a tax crisis should proceed given their specific circumstances.

It is important to act quickly in order to maintain or regain control over your assets and your finances. We welcome your call to the Scammahorn Law Firm today at (903) 595-1000, to arrange a consultation.