IRS Property Seizure FAQ
Owe a significant amount from compounding back taxes, interest and penalties?
Do not make a mistake in believing the IRS will go away or is too cash strapped to come after you. The nation’s most aggressive collection agency is working your case and has some powerful tools at its disposal.
From our years helping taxpayers resolve back tax issues, we often encounter misperceptions about what the Service can actually do. In this FAQ, we answer some of these questions.
Can The IRS Take My Home?
The simple answer is yes. Will the IRS seize your house and sell it? There are many steps in the process, which means this does not happen overnight. When it gets to this point, agents will request permission to enter your home. You can sign your name on a form and walk away. Or if you disagree with the action, the IRS must apply for a seizure order from a U.S. District Court Judge or Magistrate.
IRS agents with a seizure order show up sometimes with weapons. After you collect personal belongings, they will padlock the premises and post public notices and you’re your property to the highest bidder. Whatever the sale brings in is then applied to your tax debt.
The good news is that you have time to seek help. Problems arise if and when you ignore IRS collection notices. You have the ability to appeal a tax bill and penalty assessments – take advantage of this right early and then you may never face the loss of your home.
Can The IRS Take Other Property? Are My Bank Accounts And Vehicles At Risk?
Again, the answer is yes. Liquid assets in your savings, checking or investment accounts are usually the first targets. When the IRS files a levy against a bank account, it allows a 21-day period to sort things out.
During this time, you can negotiate a payment arrangement or notify the IRS of errors that might affect the levy. Once a bank receives an IRS levy notice, the funds in the account at that time are frozen. It wouldn’t generally apply to deposits after the levy date.
With so many bills paid by direct debit, having an account frozen can wreck financial havoc. If you ever received a notice that contains the word levy, get immediate legal assistance to avoid having assets frozen.
Vehicles are a lower priority with the seizure machine. If you have a valuable automobile like a collector car or expensive sports car that the IRS discovers, your need to take steps to protect this property by working out a solution to deal with back taxes.
Can I Challenge A Wrongful Levy Claim?
Yes, you can. This option is available as long as the IRS still possesses your property and you may be able to get it back. The process from seizure to sale can be quicker than you recognize, so once property is taken act fast.
If the IRS has already sold off your property, you have up to two years to file a wrongful levy lawsuit. But you may be limited to recouping only the amount that the IRS received from the sale, which could be much lower than fair value.
What Steps Can I Take to Avoid Property Seizure?
The first and arguably most important step is to send an email requesting a free consultation with a tax attorney. If you are facing a levy of property, the situation has become dire and you need to bring in the big guns. Our tax attorneys provide tax defense representation nationwide.
Are There Assets The IRS Cannot Seize?
The Internal Revenue Service has broad authority when it comes to their collection efforts. When seeking the repayment of tax debt, the IRS will often turn to asset seizure. In these situations, however, there are certain procedures that must be followed and numerous rules that must be adhered to.
In general, the seizing of assets is one of the most powerful collection tools the IRS has at its disposal. Whether the seizure is centered on cash assets such as a bank account or property such as a car that can be sold toward debt recovery, the IRS must follow a strict path before taking this collection action.
Typically, asset seizure is the final stage of the debt recovery process. Individuals might be able to negotiate an offer in compromise or dispute the underlying tax liability. Failing that, the IRS will follow their general policy of seizing assets as a last resort. The IRS can attempt to seize wages, bank account balances, retirement accounts, Social Security benefits or physical property such as your house or car.
What's Exempt From Seizure?
The IRS will generally consider various sources of income exempt from seizure. These can include unemployment benefits, workers’ compensation benefits and income from child support payments. Additionally, certain factors can make annuity, pension, veteran disability and public assistance benefits off limits to IRS seizure.
In any legal situation – especially those that might directly impact your future financial stability – it is crucial that you fully understand your rights as well as the possible consequences you face. A tax law professional can carefully examine your situation and provide the legal guidance you need to successfully navigate your IRS tax matter.