The Internal Revenue Service (IRS) has the authority to seize assets to collect unpaid taxes. However, there are certain assets that the IRS cannot seize, as outlined by law. Understanding these exemptions can help protect your property from seizure.
Assets Exempt from IRS Seizure
The IRS cannot seize the following assets:
- Tools of the trade or livestock: These assets are necessary for you to earn a living.
- Minimum income: The IRS cannot seize income below a certain threshold, ensuring you have funds to meet basic needs.
- Unemployment benefits: These benefits provide financial assistance during periods of unemployment.
- Workers’ compensation payments: These payments compensate for injuries or illnesses sustained at work.
- Certain pension and annuity benefits: These benefits provide retirement income.
- Service-related disability payments for veterans: These payments provide financial assistance to veterans with disabilities.
- Assistance from the Job Training Partnership Act: This assistance supports individuals in training programs.
- Income for court-ordered child support: This income is essential for supporting children.
- School books: These are necessary for education.
- Clothing: Essential clothing items cannot be seized.
- Personal possessions and furniture (up to a certain value): These items are necessary for daily living.
- Undelivered mail: The IRS cannot seize mail that has not yet been received.
- Certain amounts of fuel and provisions: These items are necessary for basic survival.
- Assets worth less than the seizure and sale expenses: The IRS will not seize assets that would cost more to seize and sell than they are worth.
Additional Protections
In addition to the exemptions listed above, the IRS also has certain restrictions on seizing property:
- Primary residence: The IRS generally does not seize primary residences.
- Notice: The IRS must provide 30 days’ notice before seizing property, except in certain circumstances.
- Release of seizure: The IRS may release seized property if the taxpayer pays the tax debt, makes arrangements to pay, or proves undue hardship.
Preventing IRS Asset Seizure
To prevent the IRS from seizing your assets, it is important to:
- Pay your taxes on time: Avoid falling behind on tax payments.
- Set up a payment plan: If you cannot pay your taxes in full, contact the IRS to set up an installment agreement.
- File for an Offer in Compromise: This allows you to settle your tax debt for less than the full amount owed.
- Get declared uncollectible: If you are unable to pay your taxes, you may be able to get declared uncollectible, which stops collection actions.
Getting Seized Property Back
If the IRS has seized your property, you may be able to get it back by:
- Paying the tax debt: This is the most straightforward way to regain your property.
- Filing an appeal: You can appeal the seizure if you believe it was illegal or improper.
- Applying for a release of seizure: The IRS may release seized property if you can prove undue hardship.
Understanding the assets that the IRS cannot seize can help protect your property from seizure. By taking proactive steps to pay your taxes or make arrangements to pay, you can avoid the risk of asset seizure. If the IRS does seize your property, you have options to get it back or minimize the impact.
10 items that IRS can not seize
FAQ
What assets can the IRS not touch?
What can the IRS not take from you?
Can the IRS seize your assets?
The IRS can legally seize your assets to collect taxes you owe. Which assets can the IRS seize? Any valuable assets can becomes cash, so the IRS can seize them. Typically, these items are sold at a public auction for tax debt repayment after your last chance to reclaim them. Properties, such as houses, vacation homes, or other real estate.
Can the IRS seize your assets to settle your tax obligation?
The IRS has the right to seize a number of different assets to settle your tax obligation. This action is typically only taken when you are seriously delinquent in paying what you owe. You can avoid it by setting up a payment arrangement with the IRS or asking for a tax debt forgiveness if you experience certain hardships.
Can the IRS seize a home?
For the IRS to get to the point of considering seizure of a home, the taxpayer likely is jumping through a lot of hoops and hiding assets, lying about income and avoiding the IRS as much as they can. The IRS cannot seize tools of the trade or livestock. You need those assets to work and pay your taxes.
Can the IRS seize taxes without a notice?
If you are a federal contractor, the IRS can seize payments without giving you 30-days notice. If the IRS believes it may not be able to collect the taxes, it can use a “jeopardy levy” to seize assets without warning. The IRS can seize state tax refunds without giving you notice.