"The IRS put a lien on my bank account." Maybe. More likely, the IRS levied the bank account, and the lien has been sitting on everything you own for a while. The difference is not a technicality. It decides what is happening to you, what notice you were owed, and what you can do about it.
The IRS's own summary is the cleanest one-liner: "A lien is not a levy. A lien secures the government's interest in your property when you don't pay your tax debt. A levy actually takes the property to pay the tax debt."
Side by side
| Federal tax lien | Levy | |
|---|---|---|
| Statute | IRC 6321 | IRC 6331 |
| What it does | Creates a legal claim against all property and rights to property | Seizes property or rights to property to pay the tax |
| When it can happen | Arises at assessment once you neglect or refuse to pay after demand | After you fail to pay within 10 days of notice and demand, and generally after a 30-day notice of intent to levy |
| Public record | Only if the IRS files a Notice of Federal Tax Lien | Served on the person holding your property, such as a bank or employer |
| Reach over time | Attaches to property you own now and property you acquire later while it lasts | Generally reaches only property and obligations existing when the levy is made, except continuous levies on wages and certain payments |
| Exempt property | No exemption list in section 6321 | Section 6334 lists property exempt from levy |
| Hearing right | CDP hearing under section 6320 after a notice is filed | CDP hearing under section 6330 before most levies |
The lien: a claim, not a seizure
Section 6321 makes the unpaid amount "a lien in favor of the United States upon all property and rights to property." Nothing moves. Your house stays in your name. Your account balance stays in your account. What changes is that the government now has a legal interest that rides along with the property. If you sell, refinance or borrow, the lien gets in the way, especially once a notice is on the public record. The details are in how a federal tax lien arises.
The levy: the taking
Section 6331(a) says that if a person liable for tax neglects or refuses to pay "within 10 days after notice and demand," the IRS may collect the tax "by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax." Section 6331(b) says the term levy "includes the power of distraint and seizure by any means," and the IRS may seize and sell the property.
Notice the connection in that language. A levy can reach property "on which there is a lien." The lien is what keeps the government's claim attached to property; the levy is how it is converted to cash.
Notice requirements are different
Before a levy
Section 6331(d) generally requires a written notice of intent to levy at least 30 days before the levy, given in person, left at your home or business, or sent by certified or registered mail. Section 6330 separately requires a notice of your right to a Collection Due Process hearing at least 30 days before the first levy for a tax period. Exceptions exist, including jeopardy and certain state tax refund levies, among others listed in section 6330(f).
For a lien
There is no advance notice requirement for the statutory lien beyond the demand for payment. For the public notice, section 6320 requires the IRS to notify you within five business days after filing, and that notice, Letter 3172, starts your CDP lien hearing window. See Letter 3172 and your lien hearing deadline.
Reach over time
This is the difference most people never hear about. Section 6331(b) says that, except for the continuous levy rules, "a levy shall extend only to property possessed and obligations existing at the time thereof." A bank levy grabs what is in the account when the bank is served, not what you deposit next week. The IRS has to levy again to reach later deposits.
Exceptions apply. Section 6331(e) makes a levy on salary or wages continuous from the date it is first made until it is released. Section 6331(h) allows continuous levies on certain specified payments, such as certain federal payments, generally up to 15 percent.
The lien works the other way. The IRS lien page says it attaches to all of your assets "and to future assets acquired during the duration of the lien." See how the lien reaches property you acquire later.
Exempt property
Section 6334 lists property exempt from levy. That list limits what the IRS may take. It does not appear in section 6321, which reaches "all property and rights to property." The Supreme Court in Drye v. United States, 528 U.S. 49, noted that section 6334(c) makes the levy exemption list exclusive: no property is exempt from levy other than what section 6334(a) specifically lists. How exemptions interact with the lien is covered in liens on exempt property and retirement accounts.
Hearings: two separate rights
The Collection Due Process rights for liens and levies are related but separate.
- A lien hearing under section 6320 is triggered by the filing of a notice. It does not stop levies. Treasury Regulation 301.6320-1(g), Q&A-G3, says levy actions are not the subject of a section 6320 hearing, and the IRS may levy for the same periods if it has satisfied section 6330.
- A levy hearing under section 6330 is triggered by the notice before levy. A timely request suspends the levy actions that are the subject of the hearing, under section 6330(e).
Section 6320(b)(4) says the hearings should be held together "to the extent practicable," and the IRS's manual notes it may issue the levy notice at the same time it files the lien so both can be addressed in one appeal.
Release works differently too
A lien is released under section 6325 when the liability is satisfied, becomes unenforceable, or a bond is accepted. See the certificate of release. A levy is released under section 6343 for reasons that include hardship and payment arrangements. You can have a levy released and still have a lien, which is common: the IRS stops taking your paycheck, but the lien on your house remains until the debt is resolved.
Why the IRS files liens before it levies
The two tools work together. IRM 5.12.2.6 notes that there is no mandatory lien filing requirement before a levy, but that before levying, the IRS should consider filing a notice for purposes of lien priority. The reason is practical: if the IRS levies on property that a later lender or buyer has an interest in, priority decides who keeps what. A filed notice protects the IRS's position while the levy plays out.
Which one are you dealing with?
- If money disappeared from an account or a paycheck, it is a levy.
- If a title search, lender or credit report shows a recorded IRS document, it is a lien notice.
- If you owe and have received a bill, you have a statutory lien whether or not you see either.
The lien is the IRS's place in line. The levy is the IRS cutting the line short.
Understanding which one you are facing tells you which notice to look for, which deadline is running, and which remedy fits.