Posted by Flynn Financial Group Inc

IRS On Seizing Property: Why does it happen and what assets can they seize?

IRS On Seizing Property: Why does it happen and what assets can they seize?

Taxpayers who are negligent in paying their IRS tax debt are putting their income and assets at risk of being seized. If you are one of them, it’s important that you know how the IRS uses an extraordinary step to collect on debts when you fail to pay what you owe after their constant warnings. It’s best to take actions now and pay your delinquent tax obligations before a collective action is set in motion by the IRS as it will quickly set you up for financial hardships. Learn about the types of income and assets that they can legally seize to satisfy your debt.

What assets can the IRS seize?

Any kind of asset that has equity and can be resold for cash can become the IRS target to satisfy the debt you owe to the federal government. Generally, it can lay claim to things such as expensive jewelry you own or investments you have been making to save for retirement.

Once these assets are seized by the IRS, you typically will no longer have the chance to reclaim them. It’s not difficult to sell them either because they are usually displayed at an action open to the public and whatever amount of money raised from the sale will then be used to pay off your debt to the IRS. It is their goal to immediately satisfy the debt after you failed to do so yourself.

Eligible Assets That Can Be Seized by the IRS

Any assets that are not a basic need for your survival and shelter can be seized by the IRS. Satisfying the debt can be done by seizing the following most common assets:

  • vehicles like boats, RVs, cars, and motorcycles
  • fine jewelry specifically those made from gold, silver, or other precious metals
  • second and vacation homes
  • retirement accounts
  • savings accounts
  • life insurance policies
  • some government benefits

These assets aren’t viewed by the IRS as a necessity to your survival or shelter nor that of your family and their equity are enough to be liquidated for their cash value. Your tax debt is paid off using the cash raised from the sale.

However, For taxpayers who owe the IRS under $5000, seizing their assets to sell may not always be taken. Garnishing of income and seizing federal tax refunds is usually done to satisfy the smaller amount owed.

How does the garnishing of wages work?

It’s always necessary for the IRS to go to court to request an order if they decide to garnish your wages. They can simply start garnishing your wages unlike other types of credits and even resort to taking a higher percentage than allowed by other bill collectors. Your wages will be garnished until your total tax debt has been paid in full. 

If you’re thinking about quitting your job to avoid repaying your tax debt, think again. You are still not excused from your obligation and even if you’re unemployed, the IRS will still make sure you pay what you owe by finding other sources of income such as the following:

  • Social Security benefits
  • Unemployment
  • welfare or public assistance
  • worker's compensation payments

The money that you must pay in back child support and that you received from Social Security disability payments cannot be legally seized by the IRS.

What are the items the IRS cannot seize?

As mentioned above, anything that you and your family need to survive every day cannot be legally claimed by the IRS. Seizing assets like your primary residence or the car your use mainly to go to work or school would mean you and your family will be homeless and without a way to earn an income. Although the IRS is legally allowed to seize almost all types of assets and sources of income, they cannot claim your basic needs.

Items such as clothing, tools, or other supplies you utilize to go to work or school cannot be seized by the IRS as well. A piece of furniture valued at or under $7720 and work tools that are valued at or under $3520 will be saved from being seized.

If your only source of income is unemployment benefits and welfare payments, the IRS will only claim up to 15 percent of your Social Security payments or survivors benefits to pay off your federal tax debt. Lastly, any assets that have no value in equity cannot be seized by the IRS out of spite. 

Flynn Financial Group Inc
Contact This Member