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What Items Can Be Seized During an IRS Collection?

June 29, 2016

There are many taxpayers that have to solicit help from a Denver tax specialist after getting that ominous letter of threat from the Internal Revenue Service. Of course, fear will often set in, but don’t freeze up. You cannot ignore this letter, though. You have to deal with it, but not on your own. Some of the fears that you may encounter include:
  • Losing your home
  • Business closure
  • Garnishing of wages
Some of these fears are warranted because the IRS will probably garnish your wages first before going for your home or business. However, with loss of wages, your family will be affected in some way or the other.

The Collection
IRS collection is the power that the Internal Revenue Service has. They have a wide range of available tools and resources to bring tax delinquency into appropriate compliance. The tools and resources used by the IRS are tempered by restrictive rules of what the IRS can and cannot take from the taxpayer. So, there are things that are off limits to the IRS, believe it or not. Let’s look first at what is accessible to the IRS.

The Notice
A Denver accountant will tell you that law protects you from having any surprise action from the IRS. The IRS is required by law to send out a notice prior to enforcing any type of collections. Before the IRs can even confiscate any of your assets, go after your finances, or consider wage garnishment, the IRS has to follow specific Internal Revenue Code by sending out the CP 90 notice, which is known as the ‘Final Notice of Intent to Levy’ as well as a ‘Notice of Your Right to a Hearing.’

The Exceptions
There are a few examples where the IRS does not have to give advanced notice to seize or levy. First is the instance where the IRS thinks that the government will be in jeopardy while collecting taxes and secondly, if it is a case of disqualified employment tax. In jeopardy levy, the taxpayer will often try to move assets out of the country. In some cases, the taxpayer will transfer assets to a third party or conceal the assets from the IRS. The IRS will levy first in these situations and send out the notice after. Employment taxes that are unpaid will cause the taxpayer to be subjected to a levy. If the taxpayer asked for a CDP hearing within a two year time frame while the levy is being served, the IRS does not have to send out a notice.  

The Seizure
Therefore, if you have received a notice from the IRS that you owe taxes, there is no immediate surprise threat to you as long as you follow the right protocol. It is highly recommended that when filing your taxes, you use a Denver tax preparation service. In doing so, you will have access to professionals that understand IRS audits. If you ignore it, the IRS can seize:
  • Hard assets like homes, vehicles, and personal belongings
  • Soft assets like retirement savings, bank accounts, and employment wages
Off Limits
If there are assets with no equity, the IRS cannot seize. For example, if you have a home, the equity has to be more than the mortgage balance and the cost to sell the home. Other items off limits to the government are:
  • Essential clothing
  • Trade tools
  • Worker’s compensation
  • Unemployment and veteran’s disability benefits
  • SSI benefits
  • Public assistance benefits
  • Court ordered child support income
Don’t carry the burden of an IRS notice when you can contact the experts at Bloch, Rothman and Associates. We will help you to construct a plan on how to handle your IRS audit. For a confidential consultation, call us at 303-321-7160.