Are Your Home and Business Safe From the IRS?
Life can take unexpected turns, sometimes to the downside. You may find yourself in a situation where you can’t or haven’t paid your taxes. Being in this situation stirs up fear for most people. You may feel haunted by the notion of an IRS agent knocking on your door. By the time a person sits in front of me at my office, they are usually feeling a significant amount of discomfort. Often, the most fear-filled question I hear from clients is “Can the IRS take my home or my business?” This is an important question because there are misconceptions about what the IRS can and can’t do.
In short, yes, the IRS can take your home, business, or any asset in which you have equity. However, seizure is rarely their best option. The IRS has standard procedures they must go through to collect tax debts. It can take several weeks or months before the IRS will notice you owe them money. Once they realize this, your account goes into an automatic collection system. A series of three notices will be mailed to you over several months. Up to this point, the process is all computerized and a person is not involved in your case. But, if you don’t pay your tax debt during this time, your case will be assigned to an IRS collection officer.
The IRS wants to get their money. Therefore, it is in their best interest to work with you in the most efficient way possible. If you show a willingness to cooperate, they are likely to work with you to establish an installment agreement or some other agreement. However, if you are not cooperative, they will resort to harsher methods. Even at this point though, seizing physical property is not an efficient tactic. They can resort to simpler methods such as wage or bank account garnishments. Because these are cash sources they are easier to access.
Even if the IRS wants to seize your property, the collection officer assigned to your case can’t make this decision. The IRS must investigate the equity in your property. If you have no equity, it makes no sense for them to seize your property. If the home is seized and sold, all the previous lien holders will be paid off first, including the mortgage holder. So, if you own a $300,000 home and your mortgage balance is $250,000, it simply makes no sense for the IRS to take your home. Even if you do have substantial equity and the IRS wishes to seize the property, they must obtain a court order. You have the right to contest such an order. You can also request help from the Taxpayer Advocate Service to stop a seizure. The Taxpayers’ Bill of Rights discourages the IRS seizure of property, especially primary residences. Vacation homes or rentals are more likely to be targeted.
What about your business? Yes, the IRS can seize your business, but again…at what cost? The process is a headache for them. They must first get a writ from a Federal Judge. Then once the business is seized, they must inventory the business and sell off one item at a time. Can you image the amount of work involved for a collection agency that is already understaffed and backlogged?
Again, to reiterate, an IRS seizure of your house or business is possible, but highly unlikely. If the IRS gets to this point, it means they have received absolutely no cooperation from you. Don’t let it get to this point! Be proactive and be open to developing or discovering a solution to your problem. The longer you put it off, the more desperate the IRS becomes. So take action today by working with a team of experienced tax professionals who know how to get the resolution that works best for you. Call us today at 877-254-4254 or connect with us online at http://www.irsallstar.com/contact-us