Dealing with tax debt can be overwhelming, especially when the IRS begins taking aggressive action to collect what you owe. One of the most serious concerns is the potential seizure of your property.
If you owe back taxes and haven’t arranged a payment plan, you might be wondering: Can the IRS really take my property?
The short answer is yes, but there are safeguards and options to help you prevent this from happening. In this article, we’ll walk you through how asset seizure works, the IRS’s process, and the steps you can take to protect your assets and resolve your tax debt before it reaches this extreme.
How IRS Asset Seizure Works
The IRS does have the legal right to seize property in order to collect unpaid taxes, but this is not something they do right away. Asset seizure is usually one of the final steps after other collection methods have failed.
Typically, the IRS will begin with a series of notices requesting payment. If these attempts don’t result in action, more aggressive measures may follow, such as placing liens, garnishing wages, or levying assets.
What Assets Can the IRS Seize?
The IRS can take several types of assets if you owe unpaid taxes, including:
Bank Accounts
If your case reaches the point of asset seizure, the IRS can levy your bank account, meaning they can take funds directly from it to satisfy your tax debt. This can leave you with limited access to your money for daily expenses.
Wages
The IRS can garnish your wages, meaning they take a portion of your paycheck directly from your employer to apply to your tax debt. This can severely impact your ability to meet other financial obligations.
Real Estate
In some cases, the IRS can place a lien on your house or other real estate properties. This gives them a legal claim on your property until your debt is paid. If you continue to ignore the debt, they could move toward seizing your home or real estate assets.
Vehicles
The IRS can also seize personal vehicles like cars, trucks, or boats. These items are then sold at auction to help pay off your tax debt.
Other Personal Property
In some instances, the IRS can seize valuable personal items, including jewelry, collectibles, or business assets, to satisfy your tax liability.
The IRS Process for Seizing Property
Asset seizure is not an immediate process, and the IRS must follow specific steps before seizing any property. Here’s a general outline of what happens:
1. Notice of Debt
If you have unpaid taxes, the IRS will send a series of notices warning you about the debt. These start as simple payment requests and escalate to formal warnings like the Final Notice of Intent to Levy. This is the IRS letting you know they intend to take collection actions.
2. Levy and Seizure
If you don’t respond or settle your debt, the IRS may proceed with a levy, which gives them the right to seize assets. Before this happens, they must send you a Final Notice of Levy at least 30 days in advance. This notice is when the IRS starts contacting your bank or employer to garnish wages or bank accounts.
3. Seizing Property
If the IRS can’t collect enough through levies or garnishments, they may move forward with seizing your assets. They are required to notify you in writing before taking property, and if they plan to auction off your assets, they will send an official notice of seizure.
4. Auctioning Your Property
Once the IRS has seized your property, they will sell it at auction to recover the unpaid tax debt. If the sale of your seized property exceeds the amount you owe on your tax bill, you could be entitled to some of the money back.
How to Prevent IRS Asset Seizure And Levy
You can avoid asset seizure by addressing your tax debt before it reaches this point. Here’s what you can do to protect your assets:
1. File and Pay on Time
The most effective way to avoid asset seizure is to file your taxes on time and pay what you owe. If you can’t pay the full amount, the IRS offers options like installment agreements or an Offer in Compromise (OIC) to make your debt more manageable.
2. Set Up a Payment Plan
If you can’t pay your tax debt in full, you can set up an installment agreement with the IRS. This allows you to make monthly payments over time and can prevent aggressive collection actions, including asset seizure, as long as you keep up with the payments.
3. Negotiate an Offer in Compromise
If you owe a large amount and can’t afford to pay it in full, an Offer in Compromise (OIC) may be an option. This program lets you settle your debt for less than the full amount owed. However, qualifying for an OIC can be tough, as the IRS will carefully review your financial situation. A tax relief professional can help you through the process and increase your chances of success.
4. Apply for Currently Not Collectible (CNC) Status
If you’re facing financial hardship and can’t afford to pay your taxes, you may qualify for Currently Not Collectible (CNC) status. This temporarily halts IRS collection actions, including asset seizure. While your debt remains, CNC status gives you some breathing room to improve your financial situation.
5. Appeal the Seizure
If the IRS has already issued a notice of seizure, you do have the right to appeal. If you can show that the seizure would cause undue hardship or that you were not properly notified, you may be able to stop the process. Working with a tax professional can ensure your appeal is filed correctly.
How a Tax Relief Professional Can Help
If you’re facing the threat of IRS asset seizure, a tax relief professional can help you negotiate with the IRS and find a solution. Here’s how they can assist you:
Negotiation: A tax relief expert can negotiate a payment plan or offer in compromise, helping you avoid asset seizure.
Representation: They can represent you in hearings or appeals, taking the stress out of dealing with the IRS directly.
Guidance: Tax relief professionals can guide you through applying for Currently Not Collectible status or challenging a seizure if necessary.
Prevention: A tax expert can help you take the necessary steps to resolve your debt early, preventing escalation to asset seizure.
Take Action Now
If you’re at risk of losing your assets to the IRS, it’s critical to act quickly. Ignoring the issue will only make things worse and could lead to asset seizure and significant financial hardship.
By working with a tax attorney like those at John Sterbick and Associates, you can take steps to resolve your tax debt, protect your property, and avoid further collection actions.
Contact John Sterbick today to discuss your options and begin protecting your assets and financial future.
