The IRS is many things. One of them is the most powerful collections agency in the world. If you find yourself on the wrong side of the IRS, they can garnish your wages, close your business and seize your assets. Why? Because they can.
937,514 Americans have delinquent tax accounts with the IRS.
If you owe money to the IRS, you are not alone. If you owe more than $5,000 you are probably starting to panic and wondering what assets can be seized by the IRS.
The good news is, there are some assets that the IRS can’t touch.
Keep reading for more information on what the IRS can and cannot take and how to avoid getting to that point in the first place.
If you are at the point where the IRS is threatening to seize your assets, Silver Tax Group can help protect you. Our tax lawyers have more than 40 years of tax defense experience throughout the nation, and we have a proven ability to resolve the tax issues facing individuals and businesses.
We can begin by processing a hardship filing, offer in compromise or an installment agreement. Our experienced tax attorneys are skilled negotiators who will keep your goals and needs at the forefront of everything we do.
WHEN YOU HIRE US, WE CAN HELP YOU:
As soon as you choose us to handle your tax issues, we will file a power of attorney, notifying the IRS that you are being represented by a tax attorney. This will put a stop to the asset seizure and allow us the opportunity to get to the bottom of your situation and find a solution that works for all parties.
Contact us today to put a stop to tax liens, levies and the seizure of your assets. We offer a free case evaluation and flat-fee pricing. Financing and affordable payment plans are available.
When you owe large amounts of money to the IRS and carry significant tax debt your income and financial assets are at risk of being seized by the IRS. The IRS will not take these measures until you have ignored repeated warnings to pay what you owe.
If you fail to heed these warnings, the IRS will take action to collect, whether it’s by garnishing your wages or seizing your assets. When the IRS finally does come for what it is owed, the consequences are serious.
The IRS has serious power when it comes to collecting what it is owed. The IRS has the right to seize any asset or item that has equity, which they can sell for cash. They can take any item you own from heirloom jewelry to retirement investments.
What’s worse is that once these items have been seized by the IRS, they are gone. The IRS will quickly sell your items, usually at a public auction. They will use the money that they get from the sales to reduce the amount of tax debt you owe. They will take whatever they can in an effort to pay off your debt as quickly as possible.
The IRS will not stop at seizing your items to satisfy your tax debt. They will also seize any assets that you have. Similarly to how they handle item seizure, the IRS will quickly resell your assets and apply what they recover to your tax bill. So, what exactly can they take?
The IRS can take any asset that is not essential to your basic needs of survival and shelter. The IRS commonly seizes vehicles including cars, trucks, boats, RVs, and motorcycles. They will take fine jewelry, especially if it contains gold, silver, or other precious metals that are easy to sell. Vacation homes and second homes are up for grabs as well.
When it comes to less tangible assets, the IRS can and will take money from your savings and retirement accounts. They will also take any money you are collecting from life insurance policies and many government benefits.
The short answer is yes, the IRS does, indeed, have the legal right to seize a taxpayer’s personal residence if taxes are in arrears.
Before panicking, though, there is some comfort in knowing that residential property seizure is not a tactic the agency resorts to often. There are some criteria the IRS looks at before determining whether they even want your house. Remember, the property is only worth something to the government if it can be sold and converted to cash. For quick sale at auction, the agency typically values the seized property at 80% of the actual market value.
Before putting your home on the auction block, the taxpayer typically gets about 10 days to address the tax arrears and reclaim the property. If you have no equity in the house, there are laws in place that prevent the IRS from seizing the property. This is likely to protect the IRS from itself, so the agency doesn’t up with an inventory of low-value houses that won’t cover the tax debts owed.
The government has far more efficient and cost-effective ways to collect back taxes. Putting an individual or a family on the street isn’t in the government’s long-term interest. But bear in mind, even if you are able to avoid losing your property under these laws, it doesn’t mean you get out of your tax debt.
The IRS cannot seize your property if:
At every step of the process, the laws gives you the right to appeal the IRS decisions and actions taken, right up through the U.S. judicial system, if necessary. In most cases, working with a knowledgeable tax attorney will be the first and most important step you can take if you are under threat of property seizure.
Before things get to the point where the IRS is picking up your car, you will have plenty of opportunities to settle your tax debt with the IRS. In fact, before the IRS can seize an asset they will send you a 30-day notice. The IRS will give you ample time and notice to resolve your debt before they seize your assets.
If you cannot pay your debt in full, you can pay it in installments. The IRS will negotiate a monthly payment plan to help pay off your debt without risking the seizure of your assets. It takes a while to get to the point of losing your assets to the IRS. In fact, if you owe less than $5,000 you likely won’t have to worry about losing your assets to the IRS.
If you owe a small amount to the IRS, they will collect their debt in other ways. The most common means for collecting smaller amounts are garnishing wages and seizing federal tax refunds. The IRS can garnish your wages without a court order. It can also do so at higher percentages than other bill collectors.
They will continue to garnish your wages until they collect every cent that they are owed. When your debt has been satisfied, they will release the levy on your wages. You don’t have to be employed to have your income garnished. The IRS will seize your income in the form of social security benefits, unemployment benefits, welfare checks, and worker’s compensation payments. The IRS cannot take money that is received for social security disability or money that is owed for back child support.
You might be wondering if there is a limit to what the IRS can take. While they do have the right to seize all kinds of assets and income, they cannot take what you and your family need to survive from day to day.
The IRS cannot take the house that you live in or the car that is your primary means of transportation. Interestingly, the IRS cannot take clothing, tools, supplies, or furniture that is needed for work or school. It also cannot take anything that has no equitable value just to punish the taxpayer for their delinquency.
If the IRS cannot sell an item for cash at auction, they cannot take it from you. While the IRS can take unemployment benefits and welfare payments, they try not to if they are your only source of income. It’s important to stay on top of your debt and avoid getting to this point in the first place.
In rare cases, the IRS may even forgive your debt if you have experienced a significant hardship.
According to the IRS website, it is possible to set up an installment agreement after an IRS seizure. The website states that “If you have assets seized by the IRS and are unable to pay the full amount of taxes owed, you may be able to enter into an installment agreement with the IRS.”
However, it’s important to note that setting up an installment agreement does not necessarily mean that seized assets will be returned. It’s best to consult with a tax professional for guidance on how to proceed after an IRS seizure.
The IRS may reject an installment agreement if the taxpayer has not filed all required tax returns, if they have not made estimated tax payments, or if they have defaulted on a previous installment agreement. Other factors that could lead to rejection include having excessive current tax liabilities or being involved in an open bankruptcy proceeding.
No matter where you are in the process, we can help you make the best of your situation.
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