Yes, the IRS can seize personal property, including real estate, if a taxpayer has neglected to pay outstanding taxes. This action, also known as a tax levy, legally permits the Internal Revenue Service to collect property to settle a tax liability for which the taxpayer has received several notices and demands for payment. Concerned whether or not the IRS can take your house? We’ve got your questions covered. In this post, we’ll share exactly what you need to know about when the IRS can take your home, when they cannot, what other items are subject to tax seizure, and how you can avoid it. Use the links below to navigate to the section that best answers your query, or read on for a complete overview of this complex tax topic.
- When can the IRS seize my house or property?
- What happens when the IRS decides to take your property?
- Can the IRS search your home?
- How do I get my seized property back?
- Can the IRS take my car? What other assets can the IRS seize?
- How can I protect my assets from the IRS?
- Wrapping up – how Community Tax can help
When can the IRS seize my house or property?IRS officials can’t just arrive at your house one afternoon demanding to take your property, and they probably wouldn’t want to anyway. How often does the IRS seize property? Asset seizure is something of a last resort that allows the IRS to settle up back taxes that have not been paid; therefore, certain conditions must be met before they can take your house or other belongings. So, when can the IRS take your house? The IRS can take your house (or other personal property) if you do not pay your taxes or take action to settle your tax debt. As we mentioned, some other requirements must take place before your home or other assets can be seized under a tax levy. The IRS usually needs to take these steps before enacting a tax levy:
- Assess the outstanding tax and issue a Notice and Demand for Payment (tax bill)
- Determine that the taxpayer has refused or neglected to pay the tax
- Send the taxpayer a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (levy notice) at least 30 days before implementing the levy.
What happens when the IRS decides to take your property?If the IRS applies a tax levy and decides to seize your property, they will sell the asset and apply the proceeds of the sale to your outstanding tax debt. Before the actual sale of the property, the Internal Revenue Service will first calculate and provide you with a minimum bid price. From there, you’ll have the chance to challenge the fair market value if necessary. Then, they’ll issue you a notice of sale and announce the sale to the public. Once the public has been notified of the sale, the IRS will typically wait at least 10 days before selling your property. The proceeds from the sale will go toward the cost of seizing the property, selling it, and the remainder will be used to help satisfy your tax debt. If there is excess money left over after the sale is complete, you can obtain a refund.
Can the IRS search your home?From unauthorized visits to fake IRS letters, there are many tax scams that taxpayers should be aware of. While the IRS may pay a visit to your home under an investigation, to discuss taxes owed, or during an audit, it’s important to know your rights and recognize when something’s not right. The IRS says taxpayers should verify that the visitor is really an IRS representative by requesting to see their credentials, and be aware that at-home visits typically only occur under the following circumstances:
- To discuss taxes owed
- During an audit process
- During a criminal investigation
How do I get my seized property back?If you want to get your seized property back, you’ll want to take immediate action to resolve your tax debt. Contact the IRS immediately to request a seizure release, or enlist the help of a tax professional to expedite the process. The IRS can also release your seized assets if they find that the collection of your property imposes economic hardship. If your request to have the seizure released is not approved, you’ll have the opportunity to appeal. There are also several circumstances where the IRS would be required to undo the seizure of your property:
- If you fulfilled your tax liability
- The collection period ended before the seizure took place
- If releasing the asset back to you would help you cover your tax balance
- You enroll in an installment agreement program and the agreement prohibits the seizure of your assets
- If the collection of your assets would result in economic hardship; preventing you from meeting your basic needs and living expenses
- The value of the property exceeds the amount owed and if the release of the asset would not prevent the IRS from collecting the tax debt owed
Can the IRS take my car? What other assets can the IRS seize?The IRS can take your home to satisfy tax debt, but can they collect your car or other pieces of personal property? Yes. A tax levy legally permits the IRS to seize property including:
- Your personal vehicle
- Real estate
- Putting a levy on your bank account
- Wages, through wage garnishment
How can I protect my assets from the IRS?When it comes to avoiding trouble with the IRS, it’s in your best interest to play by the rules. Whether it’s filing and paying your taxes or responding to IRS notices, it’s important to be timely, accurate, and thorough with your actions. If you do find yourself in tax debt, wondering, “can the IRS take my house?”, here are some steps to consider taking to stop a tax levy:
- Consider how you can shift your finances to cover your tax debt in full.
- Enter an installment agreement to settle your tax debt if you cannot pay in full.
- Request an offer in compromise to see if the IRS will allow you to resolve your tax debt for a smaller amount.
- See if your taxes can be classified as uncollectible.