How to Avoid IRS Property Seizures and Tax Liens

How to Avoid IRS Property Seizures and Tax Liens

Dealing with the IRS can be super stressful, I know. I’ve worked with lots of folks in your shoes. But don’t panic! There are things you can do to avoid having the IRS seize your property or slap a lien on you. This article will walk you through it, so take a deep breath. We’ll get through this together.

What is a tax lien?

Basically, a tax lien gives the IRS a legal claim to your property as security for your tax debt. It protects the government’s interest. The IRS files a public document called a Notice of Federal Tax Lien to alert creditors that the government has a legal right to your property. The IRS usually files a tax lien after:

• You ignore the initial notice demanding payment
• You don’t pay your taxes after the IRS sent a final notice of intent to levy
• You don’t pay your taxes after receiving a notice of deficiency

The tax lien attaches to all your property, including real estate, personal property, and financial assets. It gives the IRS the right to seize your property to satisfy your tax debt. Not cool.

What is a levy?

A levy is when the IRS legally seizes your property to satisfy your tax debt. They can grab money from your bank accounts, retirement accounts, garnish your wages, seize your car, take your business assets, and more. It’s like they put a lock on your stuff. The IRS usually levies your property after:

• You ignore the initial notice demanding payment
• You don’t pay after receiving a final notice of intent to levy

The IRS has to follow procedures before levying your property:

1. Send a notice demanding payment
2. Give you 30 days to pay up after sending a final notice of intent to levy
3. After 30 days, they can legally seize your assets

There are some exceptions where they don’t have to give you notice, but for the most part, they gotta give you a heads up.

How to prevent the IRS from seizing your assets

The best way to avoid having the IRS seize your property is to file and pay all your taxes on time. I know, easier said than done! But if you’re struggling, here are some tips:

Work out a payment plan

The IRS offers payment plans based on your financial situation. Setting up an installment agreement puts the levy process on hold. Some common options:

• Monthly payment plan – Pay a set amount each month
• Partial pay installment agreement – Pay what you can afford
• Delayed collection – Delay payment up to 6 months if you have a short-term financial hardship

Request an Offer in Compromise

An Offer in Compromise allows you to settle your tax debt for less than the full amount you owe. To qualify, you must have an inability to pay the full debt or it has to create a financial hardship. The IRS looks at your income, expenses, and assets to determine eligibility.

Prove its not your tax debt

If your spouse or ex-spouse is responsible for the unpaid taxes, provide evidence to the IRS to remove the liability from your record. The IRS can’t seize your assets for someone else’s taxes.

Claim financial hardship

Explain to the IRS that seizing your property would prevent you from meeting necessary living expenses like housing, food, and medical care. Ask for a temporary delay in collection.

Argue against the seizure

You can request a Collection Due Process hearing and argue why the IRS shouldn’t seize your property. For example, if you already paid the tax or set up a payment plan.

Remove an IRS tax lien

It is possible to get rid of a tax lien, but you have to take action. Here are some ways to remove a tax lien:

• Fully pay off your tax debt
• Enter into an installment agreement
• Get your tax debt dismissed or deemed unenforceable
• Prove financial hardship and request lien withdrawal
• Apply for an Offer in Compromise

The IRS usually removes a tax lien within 30 days after your tax debt is paid in full. Such a relief!

Recover seized property

If the IRS already seized your property, act quickly to get it back! You have some options:

• Negotiate a release of levy – Argue financial hardship or that your property is needed to pay taxes
• Redeem the property – Within 180 days of sale, you can get seized real estate back by repaying the purchaser
• Request return of levied property – If you entered a payment plan, you can sometimes get your property returned
• File a wrongful levy lawsuit – If the IRS wrongfully seized your property, you can sue

Act fast if the IRS took your property – the sooner you take action, the better. Don’t wait around.

Get professional help

Dealing with IRS tax liens and levies is super overwhelming. I strongly recommend you get help from a tax pro. They have experience navigating IRS rules and procedures. They can help you:

• Stop wage garnishment
• Release bank levies
• Avoid property seizures
• Set up payment plans
• Remove tax liens

A tax pro can deal with the IRS on your behalf. That takes a huge weight off your shoulders so you can focus on your family, your job, your life.

I hope this gives you a good overview of how to deal with IRS property seizures and tax liens. Let me know if you have any other questions! I know this is scary stuff but hang in there. Take a deep breath. You’ve got this.

Sources:

[1] IRS: Understanding a Federal Tax Lien

[2] H&R Block: Can the IRS Seize My Property?

[3] TaxCure: How IRS Property Seizures Work

[4] IRS Taxpayer Advocate: Levy/Seizure of Assets

[5] The W Tax Group: IRS Asset Seizure and How It Works