The IRS has the right to seize your home and other property if you fail to pay your federal income taxes. To exercise this authority, the IRS must notify you before they can seize anything.
If you’ve been contacted by the IRS about a tax debt, don’t assume they will come immediately to take your home. There are steps you can take now to stop the IRS from seizing your property.
How Does the IRS Seize Property?
Under federal law, the IRS can seize your property, but must follow a notification process before issuing a levy. A levy allows the IRS to forcibly take your assets to discharge your tax debt.
The IRS cannot legally seize your assets without first sending you five collection notices. These include:
- Notice of Demand for Payment: Notice CP14 is sent first, providing the amount of tax debt you owe and instructions on how to make payments. It also describes the consequences of not paying your tax debt on time, including seizure of your assets.
- 2nd, 3rd, and 4th Notices: The IRS will send four more letters over the span of a few weeks. Notice CP501 will follow the Notice for Demand for Payment. It is followed by a third (CP503) and fourth (CP504) notice.
- Final Notice of Intent to Levy: If you fail to respond to the first four notices, the IRS will issue a fifth and final notice. Once the IRS sends you this notice (CP90 or CP297), you must respond within 30 days. If you don’t appeal or otherwise respond within 30 days, the IRS can issue a levy to take your property.
In certain situations, the IRS is not obligated to give you 30 days before seizing your assets. For example, the IRS can levy your property sooner if they consider collection on your debt is in jeopardy.
What Types of Property Can Be Seized by the IRS?
The IRS can seize any property of yours, including personal possessions and real estate. This includes your home and cars. It doesn’t matter if your property is not in your possession. The IRS can take your property no matter where it is located.
The IRS can also seize your income by having it sent directly to them. This includes your paycheck, social security benefits, pensions, rental income, and balances in bank accounts and investment funds. It
Put simply, the IRS can seize most anything you own. However, they are legally prevented from levying certain types of assets. This includes unemployment, disability and worker’s compensation benefits, child support, livestock, and tools needed for work.
How Do You Stop the IRS From Seizing Your Property?
You can stop the IRS from seizing your assets by taking one or a combination of the following six actions:
- Pay Your Tax Debt. The simplest thing to do is to pay everything the IRS claims you owe in the time allotted.
- Request a Collection Due Process (CDP) Hearing. You may appeal the IRS collection by requesting a CDP hearing. At the hearing, you will have to justify your claim that the IRS should not seize your property. You could argue that the IRS erroneously determined the tax debt or that you already paid all taxes owed. If you disagree with the ruling made at the hearing, you can appeal again within 30 days.
- Request an Immediate Stay of Enforcement. If you need more time to determine what to do, you can request an immediate stay of enforcement. This temporarily prevents the IRS from seizing your property.
- File for Currently Non-Collectible Status. If you’re suffering financial or personal hardship, you could file for Currently Non-Collective status. Your expenses must exceed your income to qualify. If you are granted Currently Non-Collectible status, the IRS will temporarily cease collections against you.
- Negotiate an Installment Agreement. If you can’t pay your debt all at once, you can negotiate an Installment Agreement. This allows you to pay off your debt over time in small monthly payments.
- Bargain for an Offer in Compromise. You can also negotiate an Offer in Compromise agreement with the IRS if you qualify. This will allow you to have your tax debt discharged at a reduced amount in one payment.
To Learn More about IRS Seizure of Property
If you want to stop the IRS from seizing your property, an experienced Virginia tax attorney can help. Negotiating with the IRS is complicated and stressful if you haven’t dealt with them before.
At Sodowsky Law Firm, PC, we can handle the IRS for you and stop their collection actions against you. We have years of experience helping clients with tax debt manage their obligations to the IRS. Contact us today to learn more.