Seeing the word lien or levy on a tax letter is unsettling, but each one follows set rules with deadlines you can use. Knowing which agency sent it, and which step it is, tells you what you can still do.
Tax Liens and Levies in California: IRS and FTB Rules Compared
By Damian Gerry on LinkedIn (opens in a new tab), Founder
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A tax lien is a legal claim that secures a tax debt. A tax levy takes property to pay it. In California, both the IRS (federal tax) and the Franchise Tax Board (FTB, state income tax) use both tools. Here is how they compare.
| Topic | IRS (federal tax) | FTB (California income tax) |
|---|---|---|
| When the lien arises | After the IRS assesses the tax, bills you, and the bill goes unpaid | Automatically, when you owe tax debt |
| Public notice | Notice of Federal Tax Lien | Notice of State Tax Lien, recorded with a county or filed with the Secretary of State |
| How long it can collect | 10 years after assessment (IRC 6502) | 20 years after the latest liability for the year is due (R&TC 19255) |
| Bank levy | Funds held 21 days, then sent to the IRS | Funds held at least 10 business days, then sent to the FTB; can take all available funds, up to the balance due |
| Wage levy | Continues until released; part of pay is exempt (Publication 1494) | Up to 25% of pay |
| Release after full payment | Within 30 days | Starts when payment posts; county recording can take 3 months |
In practice, a lien affects selling or refinancing property. A levy affects money you have now, such as a paycheck or bank balance. The earlier you respond, the more options stay open.
How a tax lien works
The IRS calls a federal tax lien the government's legal claim against your property when you fail to pay a tax debt. It attaches to everything you own and acquire while it lasts, including business property and receivables, and a filed notice may limit your ability to get credit.
The FTB may record a Notice of State Tax Lien if you do not respond to its letters, pay, or set up a payment plan. The lien is public record, attaches to your California property, and lasts at least 10 years unless extended. The FTB says it may keep you from buying, selling, or refinancing property or getting a loan.
A lien is not a seizure. You keep using your home and car. If you need to sell or refinance first, the IRS can remove the lien from one property or let a lender go first.
Four ways to remove or work around a federal tax lien
| Option | What it does | How to request it |
|---|---|---|
| Release | Ends the lien after the debt is paid; the IRS releases it within 30 days after payment | Publication 1450 explains how to request a certificate of release |
| Withdrawal | Removes the public Notice of Federal Tax Lien | Form 12277. One path: owe $25,000 or less, be on a Direct Debit Installment Agreement that pays in full within 60 months or before the collection statute ends, and make three consecutive direct debit payments |
| Discharge | Removes the lien from one specific property, often for a sale | Form 14135 |
| Subordination | Lets another creditor be paid ahead of the IRS, often for a refinance | Form 14134 |
How a tax levy works
A levy is a legal seizure of property to satisfy a tax debt. Before levying, the IRS must bill you and send a Final Notice of Intent to Levy at least 30 days ahead. It can then take wages, bank accounts, retirement accounts, rental income, vehicles, or real estate.
A bank levy freezes your account balance for 21 days before the bank sends it to the IRS. A wage levy continues each pay period until released, but part of your pay stays exempt under the 2026 edition of Publication 1494.
"A lien is a legal claim against property to secure payment of the tax debt, while a levy actually takes the property to satisfy the tax debt."
Internal Revenue Service, in What is a levy?
When the IRS releases a levy
You may ask for a release when the tax is paid, the collection statute has expired, a release would help you pay, or the levy creates an immediate economic hardship. Be ready to show your monthly income and costs.
Your appeal rights with the IRS
The IRS must notify you within 5 business days of filing a lien, and you then have 30 days to request a Collection Due Process (CDP) hearing. A final levy notice gives you 30 days too, and a timely request suspends those levy actions while the hearing is pending.
The notices that start the clock, and the form to use
| Notice or situation | Deadline | Form |
|---|---|---|
| Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing | 30 days | Form 12153 |
| LT11 or Letter 1058, Final Notice of Intent to Levy and Notice of Your Right to a Hearing | 30 days from receipt | Form 12153 |
| Missed the CDP deadline | Equivalent hearing: postmarked within one year of the notice date | Form 12153 |
| Prefer an appeal outside CDP | Collection Appeals Program (CAP); see the form instructions | Form 9423 |
How the FTB collects in California
The FTB collects through withholding orders sent to your employer, your bank, or others who pay you.
A bank must wait at least 10 business days before sending levied funds to the FTB, so call the FTB as soon as an account is frozen. The FTB says paying in full is the most effective way to stop a garnishment. If you cannot, it may modify a garnishment or levy for financial hardship; call the number on your letter or check MyFTB.
FTB withholding orders at a glance
| Order | Sent to | How much it can take |
|---|---|---|
| Earnings Withholding Order for Taxes (FTB 2905) | Your employer | Up to 25% of your pay until paid in full or released |
| Order to Withhold for Taxes (FTB 2900) | Your bank or another holder of your assets | All available assets or the balance due, whichever is less; a bank sends the funds no sooner than 10 business days after it receives the order |
| Continuous Order to Withhold (FTB 2910) | Anyone who pays you, such as a client or a tenant paying rent | 25% of each payment to an individual (all of it for a business entity), for 12 months or until paid |
California note
For a full FTB lien release, file any missing returns and pay the liened balance, including interest, penalties, and fees. If the FTB levied in error, you can request reimbursement of the charges in writing within 90 days of the notice date. EDD (payroll tax) and CDTFA (sales tax) liens are separate and resolved with each agency.
What to do first
- Identify the agency and the notice number, such as LT11 or Letter 3172.
- Find the deadline on the letter. The 30-day CDP window does not wait.
- File any missing returns. The FTB requires them for a lien release, and IRS withdrawal requires current filing.
- Review payment options you may qualify for in our guide to owing the IRS on a 2025 return.
Our tax lien and enforcement help starts with a free, confidential review.
Frequently Asked Questions
Is a tax lien the same as a tax levy?
No. A lien is a legal claim against your property that secures the tax debt, while a levy actually takes property, such as wages or bank funds, to pay it. The IRS must send a final notice at least 30 days before most levies.
Can the IRS or the FTB take my whole paycheck?
Not usually. An IRS wage levy leaves part of each paycheck exempt, based on the tables in Publication 1494. An FTB Earnings Withholding Order for Taxes can take up to 25% of your pay. The IRS may release a levy that creates an immediate economic hardship, and the FTB may modify a garnishment for financial hardship.
How long does a California state tax lien last?
An FTB lien is effective for 10 years from the date it is recorded or filed, and the FTB may extend it by recording a new notice. Separately, the FTB generally has 20 years to collect after the latest liability for a tax year becomes due and payable.
Will paying in full remove the lien?
Yes, for the years paid. The IRS releases a federal tax lien within 30 days after the debt is paid. The FTB begins releasing a state lien once payment of all liened years posts, but the county recorder can take up to 3 months to record the release.
Can I sell my house if there is a tax lien on it?
Often, yes. For a federal lien, you can apply for a certificate of discharge with Form 14135, which removes the lien from that property. For an FTB lien, your escrow or title company can request a payoff from the FTB so the lien is paid and released at closing.
About Tax Liens and Levies
- IRS: Understanding a federal tax lien
- IRS: Levy
- IRS: Collection Due Process FAQs
- FTB: Liens
- FTB: Withholding orders
- Taxpayer Advocate Service
Sources: IRS, Understanding a federal tax lien; IRS, What is a levy?; IRS, Levy; IRS Publication 1494 (2026); IRS Form 14135; IRS Form 14134; IRS, Collection due process FAQs; Taxpayer Advocate Service, CDP equivalent hearing or CAP; 26 U.S.C. 6320; 26 U.S.C. 6330; 26 U.S.C. 6502; FTB, Liens; FTB, Help with liens; FTB, Statute of limitations on collection actions; FTB, Withholding orders; FTB, Help with withholding orders; FTB, Wage garnishments for taxes; California R&TC 18670.
