It’s crucial to ensure you pay all taxes to the Internal Revenue Service when they are due, which is crucial. If you owe back taxes and don’t arrange to pay, the IRS may levy your bank account and seize your property. In the event you’ve been contacted by the IRS about a tax debt, it’s important to understand what types of property can be seized and what you can do to protect your assets.
What Types of Property Can the IRS Seize?
The IRS has a specific process in place to determine which assets should be seized to satisfy a tax debt. To cause the least amount of financial hardship to a taxpayer possible, the IRS will first assess your financial situation. The Service will also consider any previous attempts to collect the debt. Since the IRS strives to collect the debt quickly, the Service will generally target assets that can be liquidated easily.
The most common tax seizure is called a “levy.” Not to be confused with a lien, which is a legal claim against your property to secure payment of a tax debt, a levy results in the property being taken. The IRS may levy many of your assets, including:
- Your wages
- Bank accounts
- Social Security benefits
- Retirement income
In addition to levying your assets, the IRS can also seize certain personal property, such as vehicles, boats, real estate, jewelry, artwork, and life insurance policies to satisfy your outstanding tax debt. However, the IRS generally avoids seizing a primary residence and targets other assets instead. The IRS may not seize unemployment benefits, pension benefits, disability payments, and Workers’ Compensation.
How Can You Protect Your Assets from IRS Seizure?
The most effective way to safeguard your assets from seizure by the IRS is to promptly meet your tax obligations. However, you may still have options if you cannot make the full payment. Contact the IRS quickly to resolve your tax liability issue and ask for a release of the levy. If the IRS denies your request, you may appeal the decision. An appeal can be filed before or after a levy has been issued.
Other options can include setting up a payment plan or negotiating an Offer in Compromise with the IRS. An Offer in Compromise is an agreement that can let you pay less than the full taxes that are owed. Even if you cannot satisfy the taxes that are due, still file your tax returns on time to avoid incurring the penalty for failure to file.
If you are suffering from financial hardship and your expenses exceed your income, you could file for Currently Non-Collective status. If you need more time to determine what to do about your tax debt, you may ask for an immediate stay of enforcement. Another way to protect your assets from being seized by the IRS is to show that the specific assets being levied are exempt — tools needed for work cannot be seized.
Contact an Experienced New York Tax Attorney
If you owe a tax debt to the IRS, it’s essential to have an experienced tax attorney who can negotiate a favorable outcome on your behalf. Offering trusted representation to individual taxpayers, businesses, entrepreneurs, and corporations, Brinen & Associates provides counsel for a wide variety of tax matters at both the state and federal levels. Call (212) 330-8151 or send us a message to learn more about how we can assist you.