The Inland Revenue Service (IRS) has a reputation for being relentless in its pursuit of a tax debt. But what are the limitations of its power? Can the IRS legally seize a property over unpaid taxes?

Here we break down under what circumstances the IRS can seize your property and the due process for doing so. If you or a loved one has reason to believe the IRS is planning a property seizure, contact a law a firm experienced in dealing with the IRS for legal counsel.

What can the IRS legally do to pursue tax debts?

An IRS levy allows the IRS to seize your property or possessions to satisfy a tax debt. Levies can be issued against homes, real estate, vehicles or other property assets. They also permit the IRS to withdraw finances directly from your salary or bank accounts.

If the IRS plans to withdraw money from your salary or bank account, it will issue a levy to your employer or financial institution. The institution, vender, or employer must comply with the levy or face legal charges of their own. 

When will the IRS come after my property? 

Understandably, the IRS saves property seizures for the most egregious cases of tax evasion and unpaid taxes. The IRS usually reserves property seizures for taxpayers that have deliberately tried to hide assets, businessowners that are not compliant with payroll procedures, or for cases of tax fraud. 

The IRS begins the seizure process by sending a letter in the mail about the details of your tax debt. At this stage, you will have the opportunity to set up a payment plan to settle the debt as well as any penalties accrued. If you believe the lien has been unfairly issued, you may appeal a tax lien with the IRS Office of Appeals at this time. The office will issue a verdict in the appeal in 5 business days. 

If you do not make any payments at this stage, and your debt is valued at more than $5,000, the IRS may initiate a collection process. This would involve the IRS seeking the permission of the District Director to go after your property, assets and bank accounts. 

Once a Levy Granted 

When all other attempts to recover the tax debt have failed, the IRS will issue a levy against a taxpayer’s assets. This does not automatically mean your property will be seized. The likelihood of the IRS carrying out the seizure could depend on the property’s location, the history of payments and taxpayer’s earnings.

If they go through with the seizure, they will arrive at the property and ask the homeowner’s permission to enter. If the homeowner refuses, the tax collectors must leave and return at a later date with a seizure order from a judge or magistrate. Once they have the seizure order, IRS agents may forcibly remove the tenants and homeowners from the property.

What can’t the IRS take?

There are some items that the IRS cannot take from a taxpayer, no matter how much they owe. These include:

•         Basic clothing items
•         Up to $7,7000 of personal items
•         Up to $3,860 worth of educational textbooks and material
•         85% of unemployment benefits
•         Undelivered mail
•         Medal of honor benefits
•         Worker’s compensation
•         Child support payments
•         Social security and welfare payments 

If you believe the IRS have wrongfully seized an asset, always contact legal counsel with significant experience handling cases against the IRS.