Unfortunately, the IRS can seize your assets if you do not pay your taxes. There are only a few types of assets that cannot be seized. The IRS cannot seize real property, and your car cannot be seized if used to get to and from work. You also cannot seize the money you need for basic living expenses. However, all of your other assets are fair game for seizure. At Master Plan Tax Solutions, we have a good understanding of what the process of a seizure includes. We know what to expect and how to go about the processes correctly.
What Types of Assets That the IRS Can Seize?
The IRS can seize assets such as bank accounts, personal property, real estate, and retirement accounts. Even if assets are not in your possession, the IRS can still seize them. For example, if you keep your RV at your mother’s house, they can seize that. What many may not know is that the IRS can also seize your wages, rent that your tenants pay and income from your clients. The IRS can seize almost everything that you own, however there are assets that the IRS cannot touch. For example, worker’s compensation, tools necessary for trade or business up to a certain amount, and household items such as furniture up to a certain amount.
When can the IRS Seize Your Assets?
To know when the IRS may seize your assets, you have to understand the process to get to that point. If you owe money for your taxes or have not filed your taxes, the IRS can issue a ‘Notice of Demand for Payment”. This notice is a bill for the amount that you owe to them. The IRS will wait for you to make a payment while you neglect, ignore, or fail to make payment arrangements. The IRS will then send you a “Final Notice of intent to Levy and Notice of Your Right to a Hearing”. This final notice will be delivered to you, left at your home, or sent to you by certified mail. At the point that the final notice is issued, you will be given 30 days to appeal or make arrangements for payment with the IRS. After 30 days, if you have not made arrangements, the IRS can begin their seizure of your assets.
How a Levy works and How You Can Stop It.
The legal seizure of your property in order to satisfy a tax debt is known as a Levy. With property levies, the IRS will send a revenue officer to your property. They will begin the seizure with assets that are in public areas, like vehicle in front of your home. They will then request access to private areas. If you give them permission to access those areas, they will take assets from those areas. If you refuse to give them permission to your home or business, they will get a legal document from the courts called a Writ of Entry. This document is similar to a warrant and provides the revenue officer with permission to enter those private areas to take property.
If you find that the IRS is garnishing your wages, they will continue to do so until you pay what is owed or the IRS makes the decision to release the levy. While this is happening, they will continue to keep your tax refunds and apply it to the amount that you owe. In order to stop the IRS from garnishing your wages, the taxes that you own will need to be paid or an agreement with the IRS needs to be in place. It’s best to work with a tax professional like our team at Master Plan Tax Solutions to find a solution.
At Master Plan Tax Solutions, we have a team of qualified professionals that will assist you with all of you financial needs such as filing taxes and handling levies. If you’re looking for a tax or financial team in Flower Mound, Texas, Master Plan Tax Solutions is here to serve you.
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FAQs
Levying means that the IRS can confiscate and sell property to satisfy a tax debt. This property could include your car, boat, or real estate. The IRS may also levy assets such as your wages, bank accounts, Social Security benefits, and retirement income.
What assets cannot be seized by the IRS? ›
However, not all property is eligible for seizure. The IRS cannot seize certain items, such as unemployment benefits, certain annuity and pension benefits, disability payments, and workers' compensation, among others. Additionally, the IRS usually avoids seizing primary residences and prefers to target other assets.
What accounts can the IRS not touch? ›
Certain retirement accounts: While the IRS can levy some retirement accounts, such as IRAs and 401(k) plans, they generally cannot touch funds in retirement accounts that have specific legal protections, like certain pension plans and annuities.
How can I prevent the IRS from seizing my property? ›
You can request a Collection Due Process hearing and argue why the IRS shouldn't seize your property. For example, if you already paid the tax or set up a payment plan.
How common is IRS seize property? ›
There's no definitive number for how many homes the IRS seizes each year. The good news is, though, that it's not common for the IRS to seize a primary residence. The IRS can levy other property, such as bank accounts and cars, instead.
How do I protect my assets from being seized? ›
The 8 Ways To Protect Your Assets From A Lawsuit You Should Know About
- Use Business Entities. ...
- Personal Insurance Ownership. ...
- Utilizing Retirement Accounts For Asset Protection. ...
- Homestead Exemptions. ...
- Titling. ...
- Annuities And Life Insurance. ...
- Transfer Assets To Your Loved Ones.
If you don't appeal or make arrangements within 30 days, the IRS can legally seize your property. The IRS physically takes your property. Then, the IRS provides you and the public with a notice of sale. Ten days later, the IRS sells the property, usually at auction.
At what point will IRS take your house? ›
The IRS can seize some of your property, including your house if you owe back taxes and are not complying with any payment plan you may have entered. This is known as a tax levy or tax garnishment. Typically, the IRS will start by garnishing your wages, salary, or commission.
Can the IRS see my bank account? ›
The Short Answer: Yes. Share: The IRS probably already knows about many of your financial accounts, and the IRS can get information on how much is there. But, in reality, the IRS rarely digs deeper into your bank and financial accounts unless you're being audited or the IRS is collecting back taxes from you.
How to protect assets from government seizures? ›
The two most common ways to protect assets are:
- Choosing a protective business structure: It is not easy for the IRS to obtain property from an LLC or other corporation. ...
- Establishing legal trusts: Though usually related to estate planning, trusts legally shift ownership of assets whenever you decide.
An IRS levy permits the legal seizure of your property to satisfy a tax debt. It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property.
Can the IRS take your inheritance? ›
Yes, the IRS can seize inherited property for unpaid taxes after following their standard process of notices.
Can the IRS leave you homeless? ›
The IRS will prioritize some assets over others. Typically your only home and vehicle you use for work will be avoided by collectors. But if you cannot cover your debt with anything else, eventually, a court order will allow the IRS to seize your residence and make you homeless.
What assets are exempt from IRS levy? ›
any real property of the taxpayer (other than real property which is rented) used by any other individual as a residence. tangible personal property or real property (other than real property which is rented) used in the trade or business of an individual taxpayer.
What assets are safe from IRS? ›
Assets the IRS Can NOT Seize
- Clothing and schoolbooks.
- Work tools valued at or below $3520.
- Personal effects that do not exceed $6,250 in value.
- Furniture valued at or below $7720.
- Any asset with no equitable value.
- Your personal residence if you owe less than $5,000.
The IRS can't seize certain personal items, such as necessary schoolbooks, clothing, undelivered mail and certain amounts of furniture and household items.
What assets can the IRS go after? ›
The IRS may levy (seize) assets such as wages, bank accounts, Social Security benefits, and retirement income.
