Yes, the IRS does seize assets such as houses and vehicles for non-payment of income taxes. But nationwide, the IRS seizes fewer than 500 homes per year.
What makes you a candidate for your home being seized?
- Your level of cooperation with the IRS. If you are responding to IRS Notices, then there will be a pathway to resolving your tax problem one way or another. It is when you ignore IRS Notices that there is a problem. If you have ignored phone calls and letters from an IRS Revenue Officer, then you are creating a problem for yourself as well.
- Do you have equity in your home? For example, if your house is worth $200,000, and you owe $175,000 on your first mortgage, then the IRS will not waste its time threatening to seize your house. The main reason is that the IRS cannot overcome a legitimate first mortgage in terms of lien priority. On the other hand, if you only owe $20,000 with that same $200,000 house, then you might have a different situation.
- How much do you owe in back taxes? If you owe less than $50,000 or even $100,000, then it is unlikely that the IRS will go to extreme measures, such as seizing your house, to collect its money. Why? Because it has other alternatives such as wage garnishments, and bank levies to get its money. Remember that the IRS doesn’t want to become a property manager. It simply wants to get its tax money, so it is much easier for the IRS to garnish wages or bank accounts. It’s quick and painless for the IRS, and it also is very stealthy. Once the IRS seizes a house, it becomes a public event, and the IRS doesn’t want to court unnecessary attention (unless you’ve been a really bad actor).
- Have you been contacted by an IRS Revenue Officer? If so, then a Revenue Officer will have greater enforcement measures to employ against you. The majority of taxpayers involved with the IRS Collections Division (around 13 million Americans at any one time) are being contacted not by Revenue Officers, but by the IRS Automated Collections Service (ACE), which is basically their 1-800 number and whomever is going to answer the phone when you call them.
- Have you been a really bad actor? In other words, are you a Tax Protestor who does not believe in the legality of the U.S. Tax Code? Or have you been arrested or are you under suspicion of having violated other federal laws? In that case, perhaps at some point, you could be at risk. Fortunately, the majority of folks who owe back taxes to the IRS are simply good people who have gotten themselves into a bad tax jam.
How to Protect your Home and other Assets from Being Seized?
If you’ve received a Final Notice of Intent to Seize Assets, then you can file an appeal known as a Collections Due Process case. By doing that, you will stop the collections process and there will be a Settlement Officer assigned to your case. A settlement conference will be scheduled over the phone for some time in the near future and you will be able to provide this Officer with your side of the case, and with any income and expense and asset information that you feel is helpful.
The Settlement Officer will render a decision after hearing all of your points, and after reviewing your information. If you’ve been steam-rolled by an over-aggressive Revenue Officer, then a Collections Due Process hearing may be in your best interest.
If you have questions or comments, please let me know.