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Tax liens and levies: Are they the same thing?

The short and unequivocal answer to the question posed in the above headline is this: No, liens and levies filed against a taxpayer’s property and assets by the Internal Revenue Service or Minnesota Department of Revenue are distinct legal instruments bringing different results.

Prior to any discussion of these potent tax agency tools, it merits mentioning that any person subject to a lien or levy has the right to secure the help of an experienced tax attorney to contest or appeal any delinquency-related matter. Having proven legal counsel on board can often materially affect the outcome of a tax case or dispute.

On a subject-specific IRS website page, the federal tax authority notes point blank that, “A lien is not a levy.” The former is the government’s legal claim against an individual’s property for failure to timely satisfy a tax obligation. A lien secures a legal interest in property rather than taking assets.

A levy, conversely, is a more dramatically exercised power. When government authorities exercise levy powers, the result is the actual taking of property to pay a debt.

Either way, the implications are clear: Both liens and levies are instruments of great government power that, when exercised, can present a formidable challenge to taxpayers trying to fulfill their tax duties.

As plenary as those powers are, they are not unbridled; government authorities must act reasonably and in accordance with duly established procedures regarding notice, the taking of property and the rights of a targeted taxpayer.

As noted, those rights include the prerogative of a challenged individual to enlist the proven services of a seasoned tax attorney. Doing so might yield a salutary result in resolving an outstanding issue or dealing with it successfully on appeal.

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