What Can the IRS Take From You?

September 13, 2019

The tax code is very broad when it comes to its explanation of asset seizure when a tax debt goes unpaid. That’s intentional because the government has an interest in giving the IRS broad powers to collect taxes. There are some protections the taxpayer, though. Encino tax consultants will tell you the IRS cannot seize anything that is necessary to survival and shelter, so typically a primary home and immediate personal possessions are safe. Any asset with equity that can be resold for cash at auction is likely to qualify, though. 

What Does “Equity” Mean? 

It means that typically the Internal Revenue Service will not be interested in anything that will cost more to process and put up for auction than it will retrieve in cash. Personal belongings, vehicles without equity in them due to lease or large debt ratio, and other assets that carry enough debt to make the equity inadequate to the goal of paying a tax debt. Expensive jewelry and artwork that carries a significant value is often regarded as such an asset, even if it is not deeded property. Los Angeles tax preparation services can provide more insight about what kinds of property are commonly seized, as well as what is protected. 

But Will The IRS Take Your Assets?

It’s not actually very likely the IRS will move to seize assets. It is a last resort. The agency prefers to use a variety of other methods that are both less expensive for them and less burdensome for the taxpayer:

• Placing a lien that prevents sale of an asset before the debt is satisfied
• Wage garnishment
• Seizing tax refunds or court settlements
• Negotiating payment plans or reduced lump sum debt payments

Taxpayers who receive a notice of a lien should work to negotiate an outcome that preserves their property ownership right away. If you’ve received a notice of a lien or a bill for past due taxes, you need to contact Encino tax advisors right away to make sure you’re getting the advice you need to protect your interests in the face of your tax challenges.