Understanding IRS Seizure Powers
The Internal Revenue Service (IRS) possesses the authority to seize and sell property to satisfy unpaid tax debts. This power extends to jointly owned property, even if only one owner is responsible for the tax liability.
IRS Seizure of Jointly Owned Property
When the IRS seizes jointly owned property, the non-debtor owner is entitled to compensation from the proceeds of any sale. However, the IRS may disregard the non-debtor’s interest if the property was transferred to them without fair consideration, which is known as a fraudulent conveyance.
Protecting Jointly Owned Property
To protect jointly owned property from IRS seizure, it is crucial to ensure that the non-debtor owner has paid fair value for their share. Additionally, transferring ownership of the property to a third party before the IRS issues a Notice of Intent to Levy can help avoid seizure.
Exceptions to IRS Seizure
Certain types of property are exempt from IRS seizure, including:
- Wearing apparel and school books
- Fuel, provisions, furniture, and personal effects up to a certain value
- Books and tools of a trade, business, or profession up to a certain value
- Unemployment benefits
- Undelivered mail
- Railroad Retirement Act and Congressional Medal of Honor benefits
- Workers’ compensation benefits
- Court-ordered child support
- Minimum exemption amount for wages, salary, and other income
- Certain service-connected disability payments
- Most public assistance payments, such as welfare and SSI
I Have a Tax Lien. Will the IRS Seize My House or My Car?
FAQ
What assets the IRS Cannot seize?
How common is IRS seize property?
Can the IRS take my wife’s house?
Can the IRS seize property owned by a non-debtor?
The IRS can legally seize property owned jointly by a tax debtor and a person who doesn’t owe anything. But the nondebtor must be compensated by the IRS, meaning that the co-owner must be paid out of the proceeds of any sale.
Can the IRS seize your property?
It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property . If the IRS seizes your property, it will sell
What happens if the IRS seizes assets other than real estate?
When the IRS seizes assets other than real estate, it physically takes custody of them—cars, cash, stock, equipment, and other items. For financial assets, the IRS sends a notice to your financial institution ordering it to freeze your account and send the balance after 21 days.
Will the IRS seize my property if I go bankrupt?
If you owned any real estate going into bankruptcy, it is still subject to the tax lien. The IRS could seize that property after your bankruptcy is over. Or, the more likely scenario is that the IRS would allow you to pay over the value of the property rather than seizing it.