Money Management - October 2001

A Dangerous IRS Notice-

Seizure of Your Property

by Scott T. Wait

Does the IRS have the right to take your property? You bet they do. If the IRS sends you a "Final Notice and Intent to Levy" letter and you do not respond by calling or writing them a note of appeal, the IRS has the right to seize your property. It can take your hard-earned money from your bank account and/or force you or your employer to hand over most of your wages. The IRS can also take your automobile and even your home.

One afternoon I received a desperate phone call from a Mr. Wolf. He had awoken that morning to find a man looking over the car in his driveway. Mr. Wolf called out, "Hey, what are you doing?" The man came to the front door and said, "I am an IRS revenue officer here to seize your vehicle for back taxes." Mr. Wolf said, "But, sir..." The officer interrupted, "No Buts, sir - you owe the IRS a lot of money, and it’s too late for you to talk about it. I am having your vehicle towed right now." After motioning the tow truck driver to hook up the car, the revenue officer then yelled, "By the way, I will get back to you regarding the rest of the money you owe the IRS very soon." The revenue officer then drove away. Mr. Wolf watched in horror as the tow truck dragged away his vehicle. This is a typical story describing what can happen to a taxpayer who waits too long to deal with the IRS.

Here are a few frequently asked questions regarding IRS levy actions:

1) Will the IRS levy your property?

In certain cases, the revenue officer will not seize property. If the IRS’s expenses to obtain and then sell your property exceed the value of the property, then the IRS will not seize the property. The seizure would be considered uneconomical.

2) Do state homestead laws protect against federal tax levies?

No. Homestead laws are not exempt from federal tax levies unless the client is in bankruptcy.

3) Are all types of property available for IRS levies?

No. The following items are exempt from tax levies:

Personal property worth up to $6,250

Books and trade tools worth up to $3,125

Unemployment benefits

Workers’ compensation payments

Federal and state welfare payments

The taxpayer’s home, unless approved by the district director

Limited exemption for salary, wages and other income

Assets under protection of bankruptcy

4) How can one release an IRS tax levy immediately?

Call the IRS collection division to request a levy release. If a collection representative does not release the levy, ask to speak with his/her group manager. If the group manager does not promise to give at least a partial release after receiving your financial information, then request assistance from the IRS’s Taxpayer Advocate Office immediately.

The IRS has vast powers to seize your current property and any rights to your future property. However, the IRS must follow federal tax laws in order to use these powers of seizure. IRS difficulties will not go away by themselves, but problems can be solved by seeking the prompt help of a tax expert.