A common fear is that the IRS may take your valuable assets to pay off unpaid taxes. The fact is, if you owe the IRS money they have a legal right to seize your possessions, including your home but the reality is, you have the ability stop or resolve the problem before it gets to that point.
But wait, how can the IRS take your home? Relax – there are a number of steps that have to happen first. Here is a quick review:
The first step in the process if you owe money to the IRS is that they must notify you. Believe us – they are going to make every effort to make sure you know that you have an unpaid tax debt.
Of course owing tax debt does not imply you did something illegal or ill intended. Often a simple taxpayer misunderstanding causes a tax debt. For instance, perhaps this is the first time you ever paid taxes. Perhaps you just filed an extension. You can incur a tax debt in either of these scenarios. New taxpayers may not know that they need to pay their tax liability at the time they file their taxes and taxpayers who have never filed an extension may not realize that their tax liability must still be paid on the original tax return due date of April 15 and not the extension date.
If you fall into one of these categories, it is likely that your unpaid tax liability is just a simple misunderstanding and one or two letters from the IRS to the taxpayer informing you of the tax debt is often enough to outline the problem and get the tax debt paid off; resolving the tax issue.
If a tax debt is not resolved through a few letters to you, the second step in the tax debt collections process is that the IRS will become more aggressive in their collection effort and may start the process to seize some assets. From the viewpoint of the IRS, if you do not respond to the IRS’ initial notifications of an unpaid taxes or follow-up to their communication, the IRS is lead to believe that you are not willing to work with them. The seizure of assets is therefore a defensive action and only occurs in situations where the taxpayer is unwilling to work with the IRS to establish a payment plan or otherwise address the tax debt owed.
If at this point a taxpayer is still not working with the IRS to figure out a resolution, the next step in the collections process is an IRS levy of some kind. Before a levy can occur, the IRS will provide you a written notice of their intent to place a levy against your assets or property. Only after the written notice will they obtain a levy – something which allows the IRS to take your property to satisfy a tax debt. Types of assets or property they can levy include bank accounts, wages, vehicles, and other personal property, including your house.
Clearly the IRS is aware that seizing the home of a taxpayer can cause a significant hardship in the life of the taxpayer. Therefore, they won’t do so unless they see no other option. Really in order to get to this point, the taxpayer has to remain unwilling to work with the IRS to establish a payment plan to pay the taxes. Also in order for the IRS to take a home, all of the other more liquid taxpayer assets – such as cash, wages, etc… must not have been sufficient enough to satisfy the amount tax debt.
As you can see, it takes a lot of effort to force the IRS to seize a home. As long as you file your taxes, even when you cannot afford to pay them and are willing to work with the IRS and agree to a payment plan, you can avoid the common worry of having your home seized by the IRS.
If you find yourself unable to pay your tax liability to the IRS, it is a good idea to hire a tax professional. The CPA’s and EA’s at Professional Tax Resolution have extensive experience working with the IRS and can address your tax debt quickly and effectively. We provide our clients guidance about their specific tax situation and advice them on the best tax settlement options available. Call for a free, no obligation tax consultation with our CPA’s today, (877) 889-6527 or email us at info@protaxres.com.
