What Kinds of Property Can the IRS Levy?
If your taxes go unpaid for an extended period of time and the IRS decides to levy your property, there’s an extensive range of assets they can take from you. The IRS can take claim to any property that is yours, or any property that you have an interest in. That can include assets such as:
- Any income, including paychecks, commissions, or rental income
- Tax refunds
- Social Security benefits
- Your accounts, like bank accounts or retirement accounts
- Physical property, such as your home, your car, or luxury items
- Alaska Permanent Fund Dividends
How Long Do I Have to Respond to IRS Form LT 11/Letter 1058
If you receive Letter 11 or Letter 1058, you have 30 days to respond to the IRS by filing an appeal. You can find your official final date to respond on the left side of your letter. If you do not file an appeal by the date listed on your letter, or within 30 days of issue, your property will be subject to levy by the IRS. Remember that this is your final notice, and the IRS has given you a substantial amount of time to act already. It is in your best interest to act as quickly as possible.
What Happens if I Don’t Respond to IRS Form LT 11?
If you don’t respond to LT 11 within 30 days, or by the date listed on the left side of your letter, the IRS can begin the seizure or your property. The IRS will seize your assets to offset your debt, meaning they can use the value of your property to pay off your debt amount. They will continue to do this until they have offset your entire debt, including interest and penalties.
They are able to seize essentially any property that you own or have a claim to. This includes financial property like bank accounts, income, social security benefits, and more. It also includes physical property, such as your home, any commercial or rental properties you may own, your car, or even luxury goods with significant value.
The IRS can also file a federal tax lien against you if you fail to respond to IRS Form LT 11 within 30 days. A tax lien, unlike a levy, is a public notice of the government’s right to your assets or any future assets that you may acquire while the lien is in place. It shows that the IRS has a legal right to claim your property.
A lien is visible to creditors and lenders, and tells them that the IRS has first right to claim your property at any given notice. Creditors typically don’t want to lend to people who have IRS liens, as it shows they may be unreliable with their debt. It also means that, if the creditor does decide to lend to a borrower with a lien, the creditor may not be able to make a claim to property in the event that the borrower cannot repay their debt, as the IRS has first claim to it.