What's the Difference Between a Tax Lien and a Tax Levy?

A tax lien and a tax levy are both actions the IRS can take when you owe back taxes, but they're very different in how they affect you. A federal tax lien is a legal claim the IRS places on your property — real estate, financial accounts, and other assets — as security for the debt you owe. The lien doesn't take your property; it just gives the IRS first priority claim on it, which can make it hard to sell your home or refinance. A tax levy is the actual seizure of your property — the IRS can levy your bank account, garnish your wages, or seize other assets to satisfy the debt. A lien typically comes first as a warning, while a levy is a collection action the IRS takes after other attempts to collect have failed. You can often remove a lien by paying the debt, entering into an installment agreement, or qualifying for another resolution option.