Key Takeaways A lien is a legal claim on your property (protects the government's interest); a levy is the actual seizure of your property (takes your assets) Liens arise automatically when you fail to pay, but a Notice of Federal Tax Lien (NFTL) must be filed to perfect the lien against other creditors Levies require prior notice and Collection Due Process rights before the IRS can seize property Liens affect your credit score and ability to sell property; levies directly take your money and assets Both can be fought — liens can be released, withdrawn, discharged, or subordinated; levies can be released for hardship or by entering a payment arrangement What Is an IRS Lien? A federal tax lien is the government's legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government's interest in all your property, including real estate, personal property, and financial assets. How Liens Arise Assessment: The IRS assesses the tax liability Demand: The IRS sends a notice and demand for payment (Notice CP14) Failure to pay: You don't pay within 10 days — the lien arises automatically by operation of law NFTL filing (optional but common): The IRS files a Notice of Federal Tax Lien in the county where your property is located, making it public record Impact of a Tax Lien All property affected: Attaches to all property you currently own and property you acquire in the future Credit impact: While NFTL filings no longer appear on credit reports (since 2018), lenders still check public records Real estate transactions: Makes it extremely difficult to sell or refinance property — the lien must generally be satisfied first Business impact: Attaches to business property and accounts receivable Priority issues: Establishes the government's priority position relative to other...