What Can The IRS Seize If I Have Tax Debt?

An unpaid tax debt can be a serious financial burden. But it’s important to know that the IRS is serious about collecting taxes owed, and it has certain powers—called “collection actions”—that it can use to get taxpayers to pay their debt. Here’s what you should know about what the IRS can take from you if you have tax debt.

Garnishment Of Wages Or Benefits

One of the most common collection actions taken by the IRS is wage garnishment, which involves taking money directly from your paycheck before it reaches you. The amount taken is determined by your filing status, pay frequency, and the number of dependents listed on your tax return. Federal benefits such as Social Security payments may also be subject to garnishment if they haven’t been taken into account when calculating your tax debt.

Levy Bank Accounts Or Property

If the IRS cannot collect a tax debt through wage garnishment or other payment arrangements, they may seize bank accounts or property owned by the taxpayer to cover the amount owed. Generally speaking, this will only happen after all other reasonable attempts to collect have failed. In some cases, however, levy action can occur without any prior warning or notification from the IRS.

Seizure Of Assets

The IRS also has the power to seize assets such as real estate and vehicles in order to settle a taxpayer’s unpaid taxes. Much like bank levies and wage garnishments, seizure action will generally only be taken after all other attempts at collecting a tax debt have failed; however, there are exceptions where assets may be seized without warning if there is evidence of fraud or other criminal activity involving taxes.

Protecting Your Income and Assets From IRS

The best way to stop the IRS from taking your assets or salary is by talking to them. You might be able to work out a plan where you pay what you owe in monthly payments, or get an Offer in Compromise and only have to pay part of what you own.

Debt forgiveness is not typically given, but in certain extenuating circumstances (like high medical bills from illness), the IRS may be lenient. To have a chance at debt forgiveness, you'll need to demonstrate significant financial hardship to the IRS.

The IRS is no laughing matter, so it's in your best interest to find a qualified tax attorney to help you out. Here at Ideal Tax, we will work with you one-on-one to come up with the best solution possible for your particular circumstances. This might involve setting up a payment plan or negotiated settlement (known as an Offer in Compromise), or even applying for debt forgiveness. No matter what, we promise to do everything in our power to reduce or eliminate your tax debt.

How To Avoid A Levy?

Filing your taxes and paying what you owe on time can help you avoid a levy. If you need more time to file, you can request an extension from the IRS. If you can't pay the entire amount that you owe, try to pay as much of it as possible. Afterward, work with the IRS to figure out a way to resolve the balance. Ignoring IRS billing notices is not proactive and could lead to further penalties so don't ignore them!

If you can't pay the full amount of taxes that you owe, there are options available to help make things more manageable. You might be able to set up a payment plan or negotiate a settlement with the IRS for less than what you owe. Refer to Collection Procedures for Taxpayers Filing and/or Paying Late and Publication 594, The Collection Process PDF (PDF) for more information about what will happen if you don’t make your required payments in full and on time.

The IRS may seize your assets if you do not reply to their billing notices and make an effort to resolve your tax debt, regardless of whether or not you believe you actually owe the stated amount. Therefore, it is in your best interest to get in touch with the IRS as soon as possible.

Options for Stopping IRS Seizure

You have two ways to stall an IRS seizure of your home if it's happening or about to happen. One is filing Form 911, which reaches out to the Taxpayer Advocate Service and requests economic hardship help. In most cases, after you file this form along with an explanation of your economic hardships, the IRS must halt its seizing attempts. They will then review your request for aid - but if they deny it, you can always file an appeal through the tax court in the U.S. District Court that corresponds with where you reside.

Another option is filing for bankruptcy. Although bankruptcy can't dissolve all tax debts, it will halt the IRS's seizure of your home, at least temporarily. This happens because once you file for bankruptcy, the court issues an automatic stay that requires all collections activities to stop.

Conclusion:

No one wants to deal with an unpaid tax bill, but understanding what collection actions the IRS can take against delinquent taxpayers is important in order to avoid having assets seized unexpectedly. By staying up-to-date on payments and working with the IRS on payment plans if needed—or seeking professional help if necessary—you can make sure your finances remain in good standing while avoiding further complications with your tax debts.