Federal Tax Lien
In Plain English:
A government claim on your property because you owe taxes. It affects everything you own until the debt is resolved.
A legal claim by the federal government against a taxpayer's property when they neglect or fail to pay a tax debt. The lien attaches to all of the taxpayer's property, including real estate, personal property, and financial assets.
Example:
After John ignored multiple IRS notices, a federal tax lien was filed against his home, making it difficult to sell or refinance.
IRS Reference: IRC § 6321
Related:Notice of Federal Tax LienTax LevySubordination
Notice of Federal Tax Lien (NFTL)
In Plain English:
The public filing that tells others (banks, credit bureaus, buyers) that the IRS has a claim on your property.
A public document filed with state or local authorities that alerts creditors that the government has a legal right to your property. Unlike the lien itself, the NFTL makes the lien public record.
IRS Reference: IRC § 6323
Related:Federal Tax LienLien ReleaseLien Withdrawal
Tax Levy
In Plain English:
When the IRS actually takes your money or property - not just claims it. They can take money from your paycheck, bank account, or sell your belongings.
A legal seizure of property to satisfy a tax debt. Unlike a lien which is a claim against property, a levy actually takes the property. Levies can be applied to wages, bank accounts, Social Security benefits, and other income or assets.
Example:
The IRS issued a levy on Mary's bank account, freezing $15,000 to apply toward her tax debt.
IRS Reference: IRC § 6331
Related:Bank LevyWage GarnishmentContinuous Levy
Wage Garnishment
In Plain English:
When the IRS takes money directly from your paycheck, every pay period, until your debt is paid.
A continuous levy on wages, salary, and other income. Unlike a regular levy, a wage garnishment remains in effect until the tax debt is paid, the levy is released, or the collection period expires.
IRS Reference: IRC § 6331(e)
Related:Tax LevyForm 668-WLevy Release
Bank Levy
In Plain English:
When the IRS freezes and takes money from your bank account. You have 21 days to try to get the money back before the bank sends it to the IRS.
A one-time seizure of funds from a bank account. When the IRS serves a levy on a bank, the bank must hold the funds for 21 days before sending them to the IRS, giving the taxpayer time to resolve the issue.
IRS Reference: IRC § 6332(c)
Related:Tax LevyForm 668-A21-Day Holding Period
Subordination
In Plain English:
Getting the IRS to step back in line, letting another lender (like your mortgage company) go first, so you can refinance or sell.
When the IRS agrees to make its federal tax lien secondary to another creditor's interest, typically to allow refinancing of a mortgage or sale of property.
IRS Reference: IRC § 6325(d)
Related:Federal Tax LienDischargeForm 14134
Discharge of Lien
In Plain English:
Removing the IRS lien from one specific property (like a house you're selling) while it stays on your other stuff.
Removal of a federal tax lien from specific property while the lien remains attached to other property. Often used to facilitate the sale of real estate.
IRS Reference: IRC § 6325(b)
Related:Federal Tax LienSubordinationForm 14135
Lien Withdrawal
In Plain English:
The IRS erasing their public notice completely, as if they never filed it. Better for your credit than just a release.
The IRS removing the public Notice of Federal Tax Lien as if it was never filed. This is different from a release, which acknowledges the lien existed.
IRS Reference: IRC § 6323(j)
Related:Notice of Federal Tax LienLien ReleaseForm 12277