The Internal Revenue Service (IRS) possesses the authority to seize property, including real estate, to satisfy unpaid tax debts. This article analyzes two key IRS resources to provide a comprehensive overview of IRS property seizure procedures and the options available to taxpayers for recovering seized property.
IRS Property Seizure Process
What Happens When the IRS Seizes Your Property?
- Notice of Seizure: The IRS will provide you with a notice informing you of the seizure and the amount of tax debt owed.
- Calculation of Minimum Bid Price: The IRS will determine a minimum bid price for the property.
- Public Notice: The IRS will announce the pending sale of the property through local newspapers or public flyers.
- Sale of Property: The IRS will sell the property at or above the minimum bid price.
- Distribution of Proceeds: The proceeds from the sale will be used to cover the costs of seizure and sale, and the remaining balance will be applied to your tax debt.
How to Get Your Seized Property Back
- Contact the IRS Immediately: Reach out to the IRS to resolve your tax liability and request a seizure release.
- Demonstrate Economic Hardship: The IRS may release the seizure if it determines that the seizure is causing you immediate economic hardship.
- Appeal the Seizure: You can appeal the IRS’s decision to seize your property, either before or after the sale.
- File a Claim for Refund: If the IRS has already sold your property, you can file a claim to have the proceeds returned to you.
IRS Actions to Collect Taxes
In addition to property seizure, the IRS may take other actions to collect taxes, including:
- Filing a Notice of Federal Tax Lien
- Issuing a Notice of Levy
- Offsetting federal tax refunds
Consequences of IRS Property Seizure
Impact on Credit Rating: A federal tax lien may appear on your credit report and harm your credit rating.
Loss of Property: The IRS can sell your property to satisfy your tax debt, resulting in the loss of your home or other valuable assets.
Wage Garnishment and Bank Account Levy: The IRS can levy your wages, bank accounts, and other assets to collect unpaid taxes.
The IRS has the authority to seize property to collect unpaid tax debts. However, taxpayers have options for recovering seized property, including contacting the IRS, demonstrating economic hardship, appealing the seizure, or filing a claim for refund. It is crucial to address IRS property seizure promptly to minimize the potential consequences and protect your financial well-being.
Can the IRS Take your House?
FAQ
How common is IRS seize property?
How long does it take the IRS to seize your property?
Can the IRS take your only home?
Can the IRS seize a home?
Generally, the IRS only seizes homes in rare situations. However, the agency can use homes to collect unpaid taxes in other ways. In particular, the IRS issues hundreds of thousands of federal tax liens annually. Once a tax lien has been issued, it attaches to your real and personal property for ten years.
Will the IRS seize my property at will?
The IRS will not randomly seize your property at will. Property seizure is generally considered a last resort when other options haven’t worked and you still have outstanding tax debt. All of these actions must happen before the IRS can issue a levy and take your assets:
What happens if the IRS seizes your money?
The most common “seizure” is a levy. That’s when the IRS takes your wages or the money in your bank account to pay your back taxes. In 2017, the IRS issued 590,249 levies to third parties like employers and banks. It’s rare for the IRS to seize your personal and business assets like homes, cars, and equipment.
How many homes does the IRS seize a year?
The IRS doesn’t publish data on how many personal residences it seizes every year. However, home seizures are rare. In fact, the seizure of homes, cars, and other personal and business assets is all relatively rare. Generally, when the IRS levies assets, it takes tax refunds, wages, and bank accounts.