The IRS can generally seize your assets when you fail to pay your tax debt and the IRS has sent you the proper notices in the mail. Even if you owe tax debt and have received these notices, you can still protect assets if you negotiate a resolution to your tax problems.
Key Insights We Will Discuss:
Steps the IRS must take before seizing your assets.
Limitations on what the IRS can seize.
Your options for avoiding an IRS seizure.
The IRS Asset Seizure Process
The IRS needs to do the following things before seizing your assets:
First, the tax must be assessed. This can occur when you file a return or when the IRS sends you a Notice of Deficiency. Once tax is assessed, your account moves to collections.
The IRS will then send you a bill. It will state how much you owe and give you a deadline for sending payment.
Once the deadline passes, you may receive further notices demanding payment. Your balance will increase each month due to late payment penalties and interest.
Finally, the IRS must generally send you a Notice of Intent to Levy and give you 30 days to request a Collection Due Process (CDP) hearing .
If you don’t respond within that 30-day period, the IRS can move forward with the levy and seize your bank account funds, wages, or other assets.
Limitations on IRS Seizures
The IRS can’t seize every type of asset. Certain assets are exempt from seizure, including unemployment benefits, veterans’ disability benefits, necessary schoolbooks and clothing, and furniture.
The IRS also can’t seize an asset that won’t result in net proceeds to the IRS. For example, the IRS couldn’t seize an asset if the costs of seizure would cost more than the value of the asset.
Even if an asset is eligible to be seized, you can also try to avoid the seizure by claiming a financial hardship. However, you need to contact the IRS before the levy occurs and provide proof of the specific financial hardship the levy would cause.
Options for Avoiding IRS Seizures
You can typically avoid an IRS seizure by negotiating a deal before or during a CDP hearing. The IRS will consider many alternatives to the levy, including:
`Installment Agreements
`Offers in Compromise
`Currently Not Collectible Status
`Innocent Spouse Defenses
You can avoid most levies by being proactive and finding the best possible resolution to your tax problems.
Executive Summary:
` The IRS must follow certain procedures before seizing a taxpayer’s assets
`You can generally avoid an asset seizure by contacting the IRS and negotiating a deal to pay off or settle your tax debt.
Have a question? Contact Venar Ayar.
4 comments on “When Can The IRS Seize Your Assets?”
What happens if the taxpayer and their assets are located outside the US?
From someone else who shared this link: “My question to the author is, “What happens if the taxpayer and their assets are located outside the US?””
What is the position for expats residing outside the US with no US assets? What if they are also not US citizens?
Recognizing the importance of understanding IRS asset seizure with respect to the non-US assets of Americans abroad … This is a really difficult question. Everybody agrees that this would be far more difficult than seizing the U.S. assets of Homelanders. I suspect that the answer to this is neither a clear “yes” nor a clear “no”. I once tried to tackle this question on Quora – it is along answer but does discuss many options. I think it comes down to this: Could the IRS reduce a tax debt to a judgment in a U.S. court and subsequently use foreign courts to sue on the basis of that judgment? My analysis is explored here ….
https://www.quora.com/Can-the-IRS-confiscate-non-US-based-assets-for-taxes-owed-after-someone-renounces-their-citizenship/answer/John-Richardson-269
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