Owing the government is a very intimidating experience. It can literally destroy you financially if you don’t act promptly! The government does have the right to take your belongings in order to collect on the debt owed to them. This authority is called IRS Asset Seizure, and happens every day!
There are a few factors considered before the government will begin an IRS Asset Seizure. They include:
- The amount of taxes you owe vs. the value of the asset needed to pay the tax
- How convenient or easy it would be to seize and liquidate the asset
- The asset’s personal value to the tax payer
The goal in an IRS Asset Seizure is that once the delinquent taxpayer realizes that their assets are going to be seized that they will opt to sell the asset in order to pay off the IRS debt. It is one way the IRS uses to force payment of back taxes. The properties that are most often involved in an IRS Asset Seizure include (but are not limited to):
- Your home and or property (primary residence, vacation property, rental property)
- Stocks & Bonds
- Bank accounts
- IRA’s & Pensions
- Cars, boats, luxury vehicles
- They may garnish wages
- Any cash value on your life insurance policies
As you can see from the above list, the IRS is not kidding around! They can and will seize some or all of the listed items depending upon the amount of your debt, including penalties and interest. Once seized, the IRS will sell off your property in order to satisfy your tax debt. This can cause you to be in financial ruin.
There are items that the IRS cannot seize, these include (but are not limited to):
- Clothing (they can take luxury items such as fur coats)
- Tools of your trade
- School books
- Unemployment benefits
- Worker’s Compensation benefits
- Child Support
- Welfare or public assistance payments
Obviously you don’t want to get to the point where the IRS is about to seize your assets. You can avoid this by being proactive. When you realize that you are not going to be able to pay your taxes, whatever the reason, contact a tax professional or the IRS immediately! Don’t wait until you are already delinquent! The idea is to let them know before the due date so that arrangements can be made. The IRS is willing to work out a payment arrangement with you; it can be based upon your actual budget so it is possible for you to make the monthly payments. If you are experiencing extreme financial hardship and can prove it, you may be eligible for an Offer in Compromise. This arrangement actually lowers the total amount owed. This is a complicated process and you really should hire a tax professional to assist you with the process.
An IRS Asset Seizure really is a last resort for the IRS. It can and should be avoided! If things have gotten to this point it is only because you have not been willing to communicate with the IRS and handle the delinquency proactively.