Understanding the IRS’s Collection Authority
The Internal Revenue Service (IRS) possesses a wide range of tools to collect unpaid taxes, including the ability to seize and sell property. However, the IRS generally does not resort to such drastic measures unless other collection efforts have failed.
IRS Seizure of Property
While the IRS has the authority to seize property to satisfy tax debts, this is a rare occurrence. The IRS must first obtain a court order before seizing property, and it will typically only do so if the taxpayer has significant assets and has refused to cooperate with the IRS.
IRS Tax Liens
A more common collection tool is the tax lien. A tax lien is a legal claim against a taxpayer’s property, which gives the IRS priority over other creditors in the event of a sale or bankruptcy. Tax liens can damage a taxpayer’s credit score and make it difficult to obtain loans or sell property.
IRS Levies
The IRS can also issue a levy, which is a legal order to seize a taxpayer’s assets, including wages, bank accounts, and other property. Levies can be very disruptive, as they can result in the loss of income or access to funds.
Can the IRS Force You to Sell Your Home?
In most cases, the IRS will not force you to sell your home to satisfy a tax debt. However, there are some exceptions to this rule.
- If you have a significant amount of equity in your home: The IRS may be able to force you to sell your home if you have a large amount of equity that could be used to pay off your tax debt.
- If you have other assets that can be sold: The IRS may also be able to force you to sell your home if you have other assets that could be sold to satisfy your tax debt.
- If you have refused to cooperate with the IRS: The IRS may be more likely to force you to sell your home if you have refused to cooperate with the IRS’s collection efforts.
What to Do If You Owe the IRS
If you owe the IRS money, it is important to contact the IRS and make arrangements to pay the debt. The IRS is willing to work with taxpayers who are experiencing financial hardship, and there are a number of payment options available.
While the IRS has the authority to force you to sell your home to satisfy a tax debt, this is a rare occurrence. The IRS will typically only resort to such drastic measures if other collection efforts have failed. If you owe the IRS money, it is important to contact the IRS and make arrangements to pay the debt.
I Have a Tax Lien. Will the IRS Seize My House or My Car?
FAQ
Can the IRS force me to sell my home?
Can the IRS kick you out of your house?
At what point does the IRS seize property?
Can IRS put a lien on your house?
Why does the IRS seize and sell so few homes?
One reason why the IRS and Department of Justice seize and sell so few homes is the No Equity Rule. Simply put, tax laws prevent the government from selling a house in a tax case unless there is equity in it. The sale must result in money recovered.
Can the IRS force you to sell your home?
HOWEVER (and this is a big HOWEVER), the IRS most definitely can force some tax debtors into a situation where they really have no choice but to sell their home. I’ll explain how this can happen, whether you might be at risk, and what to do if you are at risk of being “forced” to sell your home.
What happens if you sell a house after paying off tax?
After giving public notice, the IRS will generally wait at least 10 days before selling your property. Money from the sale pays for the cost of seizing and selling the property and, finally, your tax debt. If there’s money left over from the sale after paying off your tax debt, the IRS will tell you how to get a refund.
Can the IRS seize my home if I have unpaid taxes?
Yes, if you have unpaid taxes, the IRS has the right to seize your home through a tax levy. If the IRS seizes your home for unpaid taxes, it uses the money from the sale to cover the cost of seizing and selling the property. Then, it applies the remainder to your tax bill. You can apply for a refund if there’s any money left.