Asset seizure is one of the strongest tools for collection efforts available to the IRS. From seizing a home, bank accounts, retirement accounts or personal property, the IRS operates with a singular focus – to liquidate these assets and pay your debt.
What protections are available to you?
While the IRS certainly has the authority to seize assets, the follow-up question isn’t as cut and dry. Can the IRS take my car? Yes. Does the IRS want to take my car? Not really.
The IRS, while essentially a collection agency, doesn’t receive any long-term benefit from impeding your ability to earn a living. In fact, the IRS is vehemently opposed to taking any action that could directly lead to your furthered economic hardship. While their goal is to ultimately clear your debt – through an offer in compromise or liquidated assets – the IRS has rules in place that govern what assets can and should be seized.
For example, if you own your car outright, but it only carries a Blue Book value of $3,000, what is the net benefit to the IRS for seizing that property? They are not only paying for the services of the individuals involved in the seizure, but then have to make the effort to liquidate the asset to pay your debt. In all likelihood, the gain does not outweigh the effort.
What should you do?
In your situation, the best course of action is to work with a skilled tax lawyer who can negotiate with the IRS. While the IRS will not likely aggressively pursue an asset seizure, their actions can increase in severity based on your willingness to work with them to resolve your tax matter. Anecdotally, good communication with an IRS Revenue Officer can work in your favor.