If you owe the IRS back taxes and have not paid your tax debt, you risk losing your property to a tax levy. IRS property seizures are one of the most severe collection actions. Fortunately, you have several tax resolution options to prevent a levy.
We will review the IRS seizure process and the steps that help delinquent taxpayers settle tax debt to stop a levy.
When Can the IRS Seize Property?
As mentioned earlier, if you owe the IRS and do not pay, the agency can take your personal property using a tax levy. A levy allows the IRS to seize wages from your paycheck, take money from your bank account, and confiscate personal property (i.e., home and cars).
In the case of a house and cars, the IRS may sell them and use the proceeds to settle your tax debt.
Before your property is seized, however, the following requirements must be met:
- You owe more than $5,000 to the IRS and have not paid when notified multiple times.
- A federal judge signed an IRS seizure order.
How Often Does the IRS Seize Property?
According to 2022 tax data, the IRS issued 273,286 levies. In most cases, the IRS prefers placing a federal tax lien on a home rather than seizing it. Keep in mind that a lien is not really a lesser consequence. With a tax lien on your house, you will not be able to sell, borrow against, or even refinance this property without IRS permission.
Can the IRS Seize My House and Car?
Although rare, the IRS can seize your personal property, including your home and cars. In a nutshell, the IRS can levy whatever property they can sell to offset your tax debt.
In addition to your house and cars, here are a few other types of personal property the IRS can seize:
- Antiques
- Artwork
- Boats and other vehicles
- Commercial property
- Jewelry
How Does a Taxpayer Prevent the IRS from Seizing Property?
If you are on the verge of losing your property to the IRS, you can take action to save your assets. The easiest way to stop a tax levy on your property is to pay off your tax debt. However, if you cannot afford to settle your tax debt, you should at a minimum make payment arrangements with the IRS to prevent property seizures.
The following are four IRS settlement options available to you:
Payment Extension
Request more time to pay from the IRS. In most cases you will have up to 120 days to pay back taxes.
Short-Term Payment Plan or Long-Term Installment Agreement
Request a payment plan that allows you to spread your IRS payments over a number of months instead of paying your tax debt all at once.
There are two basic types of monthly IRS payment plans: short-term (individuals only) and long-term (individual or business). Note that short-term plans must be paid within 6 months.
Currently Not Collectible Status (CNC)
Request that the IRS delay collections until you have a better financial situation. Note that CNC is temporary. You will continue to have interest charges added to your tax debt while currently not collectible. The IRS will review your hardship periodically to determine when to resume collections.
Offer in Compromise (OIC)
Submit an offer to the IRS to resolve your unpaid taxes for a lesser amount. An OIC can be a good option when you have high debts/expenses relative to income/assets.
How Does a Taxpayer Get Property Back When the IRS Seizes It?
After seizing a delinquent taxpayer’s property, the IRS waits for at least ten days before selling it. To get your seized property back, you will have to contact the IRS to make arrangements to resolve your tax debt and to request a levy release.
As mentioned above, you will first need to have a payment agreement with the IRS and be submitting payments to pay off your tax debt. If the IRS turns down your property release request, you can always consider appealing this decision. Of course, you will need to submit your appeal before the agency sells your property.
What Should a Taxpayer Do If They Have a Financial Hardship and the IRS Seized Property?
Contact the IRS immediately to explain your financial situation. In many cases, the IRS will ask you to complete a 433 collection information statement form to verify your hardship. Then the IRS often releases a property seizure once it determines its actions will trigger or worsen an economic hardship.
Note that the IRS views economic hardship as a situation where a levy prevents a taxpayer from meeting basic living expenses.
What are the Steps to Appeal an IRS Property Seizure?
Once the IRS sends you an LT11 notice (its final notice of intent to levy), take the following steps to appeal:
- Complete Form 12153 to request a collection due process hearing.
- Send your 12153 CDP form within 30 days to the address listed on your levy notice.
- Wait for the Independent Office of Appeals to consider your property seizure appeal and render a decision.
When you have a delinquent tax debt, it is normal to worry about losing your property to the IRS. IRS agents will seize your assets if you do not pay your back taxes and ignore balance due notices and reminders.
Fortunately, you have several options as discussed above to prevent IRS property seizures. If you need help to save your property, start online by answering 6 simple questions. We never charge for ‘investigations’ or consultations. You can also call us at 866-568-4593.
6 Simple Questions. Free Evaluation.
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