People who owe the IRS money sometimes fail to appreciate the lengths that this organization will take to recover a debt. Along with sending letters to debtors and attaching liens to bank accounts, the IRS will also seize a wide variety of assets.
Despite having relative leeway when it comes to seizing your property, the IRS cannot touch all of your assets, however. When recouping what you owe to the government, this organization cannot legally take these valuables from you.
Sources of Income
Of course, one of the primary ways that the IRS recoups what people owe is through wage garnishment. Even so, while it can legally attach a lien to a small portion of your income, it must leave you with enough to live on and with which to support your family and pay court-ordered obligations like child support.Further, the IRS cannot legally seize sources of income like:
- Court-ordered child support
- Worker's compensation
- Railroad retirement or Congressional Medal of Honor benefits
- Welfare
- SSDI
- Assistance given for federal job training
- 85 percent of unemployment benefits
Physical Assets
People who owe a large tax debt often worry that the IRS will come and take away their car or house. It is true that the government can seize houses that are used as vacation or second homes. It can also take away vehicles that are not used to drive you or your children to and from work or school.However, if you owe a tax debt that is less than $5000, the IRS will not put a lien against your family's home. It also will not seize assets like:
- Clothing worn for everyday use
- School books
- Books that are used for vocational training or skills
- Fuel and provisions
- Furniture and personal effects valued at $7000 and under
- Undeliverable mail
In essence, the IRS must leave you with enough money on which to live, a house in which to live, a vehicle to drive you to and from work or school, and enough basic necessities on which to survive.
If you have luxury goods or collectibles, however, these items can be taken and sold to satisfy your debt. Some of the more common luxury goods taken to settle a debt include fur coats, designer handbags and shoes, sports cars, boats, and other big ticket items that are not considered to be necessities.
Likewise, if you have a 401k or personal IRA retirement account, the IRS can legally take that money to pay off what you owe the government. If you owe a substantial amount and you are nearing retirement, this seizure could leave you short on extra cash beyond what you would receive from Social Security.
Preventing Asset Seizure
Even with the IRS being unable to take away some of your assets, you may wonder what you can do to keep all of your possessions and money intact. Before a lien is placed against you, you should attempt to resolve your debt by:- Making an Offer in Compromise
- Setting up a payment arrangement
- Paying off the debt entirely
- Asking for a partial forgiveness of the debt
You can request these actions on your own or by retaining the help of a tax professional. The IRS is usually open to settling the debt through such means without having to place a lien against you or your assets.
The IRS utilizes a variety of means to collect debts owed to the government. However, if you owe a tax debt, you can take the best action for you while knowing that these assets will not be taken from you.
