Everyone can agree that the solid bedrock of any relationship is communication.
And, as any couple knows, failing to communicate means backlash and a heap of relationship issues. Non-communication elicits drastic responses.
I’m not just referring to your relationship with your significant other here… I’m talking about your relationship with the IRS. For better or for worse (usually the latter), you’re going steady with the Internal Revenue Service when you start earning your own income, and they are going to be up in your “business” if you don’t pay what you owe — figuratively and literally (if you’re a business owner).
When you start racking up debt and avoid paying it despite the IRS’s stream of standard mail messages to your Chattanooga mailing address, you can bet they’re going to take it personally. They might even take your personal… property if your tax debt is serious enough.
But take a beat and breathe a little easier here because property seizure is NOT an easy task nor a decision the IRS jumps to easily or very often (except in extreme cases — ahem… see non-communication note above). And, I’ll let you in on the key to repairing that relationship with Uncle Sam: COMMUNICATION.
Just getting on the phone with the IRS means smoothing out the rough waters and getting the IRS to dial back its more drastic compliance efforts (*cough* personal property seizure).
To further ease your mind, let’s take a look today at what they have to go through to actually get to the property seizure boiling point. And while we’re at it, let’s also talk about how you can get your effects back… maybe even prevent the seizure in the first place.
What they can (and can’t) take
First off, the IRS can only take your property after jumping through a lot of hoops, like…
- They demand payment from you
- You don’t contact them to take care of the tax debt
- The IRS issues a final notice of intent to levy and gives you 30 days to answer
Now, you’ve probably already thought this, but the term “personal property” is a broad one. It can include, for instance, your money, which is the subject of the most common form of IRS seizure — aka the levy.
The IRS does a lot of levies every year — you’ve probably heard of “garnishing” wages or bank accounts. They can also take your retirement accounts, stocks and bonds, Social Security benefits, and (in some cases) rent from your tenants and payments from your Chattanooga clients.
“Personal property” also includes the more obvious kinds of property like homes, cars, and so on. Federal seizure of these is less common — and harder for the IRS to do. They need a court order and a lot of internal cooperation between many federal collectors, among other things — and not even the IRS wants to airily take away somebody’s primary Chattanooga residence. Important note: They consider this a last resort after zero cooperation from a taxpayer and generally use it just for tax fraudsters and taxpayers who hide assets, among a select few others.
But in these cases… Yes, the IRS does show up. If you find yourself in this rare category, you can (usually) expect to be provided with an estimate of the value of your property — which you can challenge. Then the IRS gives you a notice of sale and announces the pending sale to the public. They’ll generally wait at least 10 days before selling your property (which isn’t long… unless you count the days of non-payment and non-communication that got things to this point in that — the IRS does).
They subtract how much it costs to take and sell your property and then slap the leftover funds against your tax liability. You might even get a refund if there’s money left over… though cold comfort when you’ve just lost your home.
Those 30 days we mentioned at the beginning are key: You have a good chance to appeal if they don’t give you enough notice—unless you’re a federal contractor. Keep in mind, the IRS also doesn’t have to give the 30-day notice if…
– In some cases of unpaid payroll taxes (with your prior appeal)
– They think for whatever reason they won’t be able to collect the taxes.
– They also want to take your state tax refunds.
Your belongings are not a grab-bag for the federal government, though. They can’t touch unemployment benefits, workers’ comp payments, some funds from pensions and annuities, service-related disability payments (if you’re a veteran), and money you need to make court-ordered child support payments — to name a few. Nor can they take assets you need to make a living and pay back your taxes.
Hitting the brakes
Something to be aware of: You have the right to appeal through this whole process.
For example, if an IRS Revenue Officer contacted you about the levy or seizure, and you disagree with the decision, you can request a conference with the IRS Collection Manager. If that fails, you can submit a written request for appeals consideration (IRS Form 9423)… though on this form you must offer a solution to your tax problem.
If you request an appeal after the IRS makes a move toward property seizure, you must appeal to the Collection Manager within 10 business days after the Notice of Seizure is given to you or left at your home or business.
You may appeal before or after the IRS seizes and sells your property. After the seizure money has gone to the IRS, remember that you have to file a claim in order to get the property back. You can even appeal a denial of your request.
There are a few more details — a lot, we realize, but that’s something we’re more than ready to help you with.
One of your best moves is to start paying off that tax debt right away. There are a lot of ways to do this, usually depending on how much you owe — such as offers in compromise or a variety of installment payment agreements.
If you don’t have many assets, you may be able to stop the seizure by getting an “uncollectible” declaration — in other words, you prove to the IRS that collecting your back taxes right now will cause you undue financial hardship. Mind you, this is just a temporary solution.
In some cases, the seizure may even be… a mistake (*gasp* The IRS makes mistakes?! Yes. Yes they do). For instance, you’ve already arranged to pay your taxes, or your debt is a result of identity theft, or your spouse or ex is solely responsible for the tax problem.
We know that even this overview sounds like a real mess if you’re caught in the middle of it, but we’re here for you. No matter what your tax situation looks like at the moment, always reach out any time:
We’ll help you as you rebuild your relationship with the IRS, but it starts with your response.
On your team,
John and Wanda King