IRS seizures are one method that the government uses to collect large amounts of back taxes that an individual or company has owed for many years. Quite often the amount of the taxes is much smaller than the total amount owed because penalties and interest are applied to any unpaid balances each year. These compound each year making the bill even larger. Although there are many ways the IRS can collect the money it is owed, IRS seizures are the last resort and are a very extreme measure to take. The IRS seizures can seize almost all of your possessions without having to take you to court or get a judgment from a court. It is actually a very powerful tool in collection of taxes and one that the majority of taxpayers fear most.
The IRS, in an IRS seizures, is allowed to take just about everything you own to sell and redeem the money you owe. Some of these include:
- Any and all bank accounts;
- Earnings of all kinds;
- Any assets that you have transferred. These will be sold at fair market value, which is often a lot less than they are actually worth;
- Any real estate that you own. This includes your home, your furniture and your vehicle;
- Any federal pensions;
- The liquidity of any life insurance that you have;
- Any benefits or income from Social Security;
Although this is not a comprehensive list, it gives you an idea of just how devastating an IRS seizure can be.
With regard to the IRS seizure of homes and businesses, the District Director of the IRS can simply sign a form that leaves you homeless or without a business to operate. The only exception is that if you owe $5,000 or less, the IRS cannot seize your home. In the case of seizing a business, the IRS does have to follow a certain procedure for this type of seizure. The IRS seizures has to gain your permission to enter the business in order to shut it down. If you consent, you will have to sign a paper stating that you gave the agents permission to enter. If, on the other hand you refuse to grant them entry, the agents will apply to the District Court judge or magistrate for a court order to execute the IRS seizure. Once this is done, and it is only a formality, the agents will enter your business, order everyone out, lock the doors and sell the property to the highest bidder. You will only be allowed to remove your personal effects and will not have very much time to do this.
The IRS only resorts to IRS seizure under certain circumstances, including:
A taxpayer who is continuously in default of taxes
A taxpayer who is unwilling to work with the agents to clear up the outstanding taxes
If all other methods to collect the outstanding taxes have failed
There are measures you can take to halt any IRS seizure of your property. One of the ways is to appeal for a “due process hearing”. In this hearing, you have the right to question the validity of the seizures or the amount for which the IRS bills you. You can ask for an Offer of Compromise and even if this fails, at least you gain some extra time to pay off some of the money you owe.
In any case, you should never take these measures lightly or attempt to attend the hearing on your own.