Constitutional requirements and amendments demand all citizens pay taxes. Naysayers argue and advocate against tax law, but no one is exempt from paying them.
Foregoing regulated prerequisites of tax law could subject you to an IRS seizure.
Miseducated tax filers account for $458 billion in unpaid taxes. Blame confusion, accounting mishaps or nefarious deception. Tax filers mishandle their tax obligations every year.
The result? Forced forfeiture by the government of all your hard work.
Yet, for those who’ve succumbed to tax debt, there’s a resolution. Levies or garnishments on your property and wages are negotiable.
If you’re suffering under duress from the IRS about your property, continue reading. Learn here how to protect what you own from an IRS seizure.
What Is the IRS Seizure Process
The IRS doesn’t outright strongarm your assets. They comply with a legal process of steps before issuing a levy.
1. Tax Bill
The law requires the IRS to notify tax debtors of outstanding tax debt. When you fail to fulfill your debt in full as you file taxes, the IRS sends a tax bill.
This bill — demand for payment — starts the collection process. After the process commences, it does not end until the tax account gets satisfied. Or, the action stops when the IRS can’t legally collect any further — the process expires.
Within the bill notice are stipulations for penalties, interests, and options for repayment. It’s your responsibility to make contact with the IRS about the debt, or to discuss payments options.
If you fail to voluntarily respond, the IRS moves forward with a Notice of Federal Tax Lien.
2. Tax Lien Notification
Debtors often confuse the tax lien with a levy. They’re separate notices and actions. The tax lien is a basic claim against your property and assets for the debt you owe.
Tax lien claims include current possessions and those obtained after the lien’s enforced. Liens arise within 10 days of the tax bill and affect your public records and credit rating.
The IRS refrains from releasing liens until they’re paid in full — penalties and interest included.
3. Notice of Levy
Neglecting to respond to a tax lien, results in a notice of levy. A levy notice is a final attempt by the IRS before they seize your assets. That includes offsetting your tax return, regardless of entitlement.
In some cases, the tax debtor has 30 days to make an appeal or payment arrangements. But if the IRS believes the debt is in jeopardy, immediate action gets taken.
Property Types Eligible for Seizure
A levy includes a wide range of property and assets. Personal property, including real estate, does not have to be in your possession for the IRS to seize it.
If you have a property in a different state than where you reside, the IRS can take it. Common seizures sold by the IRS to pay tax debts include:
- Vacation homes, and second homes
- Vehicles – Cars, boats, RVs, and motorcycles
- Financial Accounts – Retirement and Savings accounts
- Specified government benefits (including Social Security Benefits)
- Retirement funds
Assets and properties of such are of menial value to the IRS. They value the equity in these assets, how they may liquidate them for cash. All cash raised from the sale of assets gets applied to the tax debt you owe.
The IRS does refrain from levying certain types of properties and assets.
- Primary residence (unless approved by a District Court Judge)
- Primary Vehicle used for work or educational purposes
- Worker’s compensation and employment benefits (if they’re your only source of income)
- Child support
- Salary and income exemptions (the minimums)
- Certain furnishings and household goods up to a fixed amount
The IRS will also forego a levy on work tools, work clothing, and supplies needed for survival. They don’t want something like the butte county campfire to happen and you’re stranded without what you’d need to flee the area.
Collection Due Process Hearing (CPD)
When you receive a notice of proposed or intent to levy, you have a right to a CPD. A Collection Due Process Hearing is an appeal to the IRS regarding tax debt.
The Internal Revenue Service allows 30 days to submit a CPD hearing request. You’re required to put the request in writing by completing Form 12153. If you return the form to the proper address within the allotted timeframe, you’re eligible for judicial review by the Tax Court.
During this review, the IRS suspends the levy for the appealed tax periods.
If you miss the deadline, you’re still entitled to an Appeals hearing within one year. Refer to the guidelines mentioned on form 12153.
Halting the Levy
Levies and garnishments continue until you pay the tax bill in full or the IRS frees up the levy.
In the meantime, you forfeit tax returns and risk having your compensation or bank account frozen. If the IRS levies your account, the bank freezes funds for a period of time before sending the money to the IRS.
They can seize property in public areas — parking lots and driveways. And, enter your home or business with a Writ of Entry. Once they enter your private property, they can rummage through and take assets.
Work with a tax professional to help you communicate a payment plan with the IRS. In most cases, you can enter an installment agreement. And if you meet certain low-income guidelines, fee waivers apply.
Assets with No Equitable Value
The law doesn’t permit the IRS to levy assets with no equitable value. Property and holdings with no cash value receive an exclusion from IRS seizure.
Cars and homes that are sellable at auction, remain in your possession if they lack cash value.
Keep Your Stuff
Never neglect a tax bill from the IRS. If it’s money you owe, you’re required by law to pay it. Contact a tax professional and respond in a professional manner to every notice.
If you have difficulty paying the tax obligation, be honest with the IRS. Communicate your financial position with them. Cooperation helps you avoid an IRS seizure.
Contact our tax group today for help obtaining emergency relief from IRS actions.