Corona IRS Seizures of Assets

Corona IRS Seizures of Assets

IRS asset seizure is a legal process where the IRS takes possession of a taxpayer’s property to satisfy unpaid tax debts. This action is typically a last resort after the IRS has made multiple attempts to collect the debt through other means, such as sending notices and levying bank accounts. The IRS can seize various types of assets, including personal property, real estate, financial accounts, and business assets. Once seized, these assets are sold, and the proceeds are used to pay off the tax debt.

Legal Basis for IRS Seizures of Assets

Tax Code Provisions

The Internal Revenue Code (IRC) provides the legal framework for the IRS to enforce tax laws, including the authority to seize assets. Several sections of the IRC are particularly relevant to asset seizures:

• IRC Section 6321: This section states that if any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person. This lien arises automatically when the IRS assesses the tax and demands payment.
• IRC Section 6331: This section grants the IRS the power to levy upon all property and rights to property of a taxpayer who has failed to pay their taxes within ten days after a notice and demand for payment. The levy allows the IRS to seize and sell any type of property that the taxpayer owns or has an interest in, to satisfy the tax debt.

Authority of the IRS

The IRS has broad authority to enforce tax collection through asset seizure. This authority is rooted in federal law and is designed to ensure that taxpayers meet their tax obligations. Key points include:

• Levy Power: The IRS has the power to levy (seize) property to satisfy tax debts. This can include real estate, personal property, financial assets, and business assets.
• Lien Power: The IRS can place a lien on the taxpayer's property, which is a legal claim against the property for the amount of the unpaid tax debt. A lien ensures that the IRS has a legal right to the property if it is sold or transferred.
• Garnishment: The IRS can garnish wages and other income sources directly from the taxpayer’s employer or financial institution.

Due Process Requirements

Before the IRS can seize a taxpayer's assets, it must follow certain legal procedures to ensure due process. These requirements include:

• Notice and Demand for Payment: The IRS must first send a notice and demand for payment to the taxpayer, informing them of the amount owed and requesting payment.
• Final Notice of Intent to Levy and Right to a Hearing: If the taxpayer does not respond to the initial notice, the IRS must send a final notice at least 30 days before the levy. This final notice, known as a Notice of Intent to Levy, informs the taxpayer of the IRS’s intent to seize property and provides the taxpayer with the right to request a Collection Due Process (CDP) hearing.
• Collection Due Process (CDP) Hearing: The taxpayer has the right to request a CDP hearing within 30 days of receiving the final notice. During this hearing, the taxpayer can present their case to an independent officer, contest the levy, propose alternative payment arrangements, and explore other options to resolve the tax debt.
• Appeal Rights: If the taxpayer disagrees with the outcome of the CDP hearing, they have the right to appeal the decision to the IRS Office of Appeals or the Tax Court.

Types of Assets the IRS Can Seize

Personal Property

The IRS has the authority to seize various types of personal property to satisfy unpaid tax debts. These include:

• Cars and Other Vehicles: Automobiles, motorcycles, boats, and recreational vehicles can be seized and sold by the IRS.
• Jewelry: High-value items such as watches, rings, necklaces, and other jewelry can be taken to recover tax debts.
• Electronics: Expensive electronics, including computers, televisions, and home entertainment systems, are also subject to seizure.
• Collectibles: Items such as art, coins, antiques, and other valuable collections can be seized and auctioned off by the IRS.
• Household Goods: Furniture, appliances, and other valuable household items can be taken to satisfy tax liabilities.

Real Property

Real property, including land and buildings, can also be seized by the IRS. This includes:

• Primary Residences: Although the IRS typically avoids seizing primary residences, it is not prohibited. Before seizing a primary residence, the IRS must obtain court approval and ensure that all legal requirements, including providing adequate notice and opportunities for the taxpayer to address the debt, are met.
• Secondary Properties: Vacation homes, rental properties, and undeveloped land are more commonly targeted for seizure, as they are not considered essential living arrangements.
• Commercial Real Estate: Properties used for business purposes, such as office buildings, warehouses, and retail spaces, can also be seized to satisfy tax debts.

Financial Assets

The IRS can seize a wide range of financial assets to satisfy tax liabilities. These include:

• Bank Accounts: The IRS can levy funds directly from checking, savings, and money market accounts.
• Retirement Accounts: Although more complex, the IRS can access retirement funds from accounts such as 401(k)s, IRAs, and other pension plans. However, they must follow specific procedures, and early withdrawal penalties and taxes may apply.
• Investment Accounts: Stocks, bonds, mutual funds, and other securities held in brokerage accounts can be seized and liquidated to pay off tax debts.
• Life Insurance Policies: Cash value from life insurance policies can be accessed by the IRS to settle outstanding tax liabilities.

Business Assets

The IRS also has the authority to seize assets used in business operations. This can significantly impact a business’s ability to function. Types of business assets that can be seized include:

• Equipment and Machinery: Industrial equipment, manufacturing machinery, and other tools essential for business operations can be taken and sold by the IRS.
• Inventory: Products, raw materials, and goods held for sale can be seized to satisfy tax debts.
• Accounts Receivable: The IRS can levy amounts owed to the business by its customers, effectively redirecting these payments to satisfy the tax debt.
• Business Vehicles: Trucks, delivery vans, and other vehicles used for business purposes can be seized.
• Business Bank Accounts: Funds held in business checking, savings, and merchant accounts can be levied to recover unpaid taxes.

The Process of Asset Seizure

Notice of Intent to Levy

The IRS begins the asset seizure process by issuing a Notice of Intent to Levy. This notice is a formal warning that the IRS intends to levy, or seize, the taxpayer's assets to satisfy unpaid tax debts. The process and timelines are as follows:

• Initial Notice: The IRS sends a notice and demand for payment, informing the taxpayer of the amount owed and requesting payment.
• Notice of Intent to Levy: If the taxpayer does not respond to the initial notice, the IRS issues a Notice of Intent to Levy. This notice states the IRS’s intention to seize assets if the debt is not resolved.
• Timeline: The Notice of Intent to Levy must be issued at least 30 days before the IRS takes any levy action. This 30-day period gives the taxpayer time to respond, make payment arrangements, or request a hearing.

Final Notice and Right to a Hearing

The Final Notice of Intent to Levy and Notice of Your Right to a Hearing is the last step before the IRS can proceed with asset seizure. Key details include:

• Final Notice: This notice serves as the taxpayer’s last warning and must be sent at least 30 days before the levy is executed. It includes detailed information about the taxpayer’s rights and the next steps they can take.
• Right to Request a Hearing: The taxpayer has the right to request a Collection Due Process (CDP) hearing within 30 days of receiving the final notice. This hearing allows the taxpayer to contest the levy, propose alternative payment solutions, and present their case to an independent officer.

Collection Due Process (CDP) Hearing

The CDP hearing is a critical component of the asset seizure process, providing a formal opportunity for the taxpayer to dispute the levy and seek alternative resolutions. Key aspects of the CDP hearing include:

• Requesting a Hearing: To initiate a CDP hearing, the taxpayer must submit Form 12153, Request for a Collection Due Process or Equivalent Hearing, within 30 days of receiving the final notice.
• Independent Review: The hearing is conducted by an independent officer from the IRS Office of Appeals who reviews the case impartially.
• Presenting Your Case: During the hearing, the taxpayer can:
  • Dispute the validity of the tax debt.
  • Propose alternative payment arrangements, such as an installment agreement or offer in compromise.
  • Present evidence of financial hardship that would justify placing the account in Currently Not Collectible (CNC) status.
  • Request innocent spouse relief if applicable.
• Outcome: The hearing officer will make a determination based on the information presented. The IRS cannot proceed with the levy until the hearing is concluded and a decision is rendered.

Levy and Seizure Execution

If the taxpayer fails to resolve the debt or does not request a hearing, the IRS will proceed with the levy and seizure of assets. The steps include:

• Issuing the Levy: The IRS issues a levy notice to the financial institutions, employers, or other entities holding the taxpayer's assets. This notice instructs the entity to freeze the taxpayer's assets and prepare to transfer them to the IRS.
• Freezing Assets: Upon receiving the levy notice, financial institutions must freeze the specified accounts, typically for a period of 21 days. This freeze provides a short window during which the taxpayer can potentially resolve the issue before the assets are transferred.
• Seizing and Selling Assets: If the debt remains unpaid, the IRS will proceed to seize and sell the taxpayer's assets. The proceeds from the sale are used to satisfy the tax debt. The IRS may seize personal property, real estate, financial accounts, and business assets as needed.
• Notification: The taxpayer will receive notification of the seizure and sale, including details of the assets seized and the amount recovered.

How Tax Alliance Can Help

If you are facing the threat of IRS asset seizure, it’s crucial to act quickly and seek professional assistance. Don’t navigate this challenging situation alone—let the experienced team at Tax Alliance provide the expert guidance and support you need.

Take the first step towards protecting your assets and securing your financial future by contacting Tax Alliance today for a free, no-obligation consultation. Our team of seasoned professionals will assess your unique situation, provide personalized advice, and develop a strategic plan to address and prevent IRS asset seizures. Acting promptly can make a significant difference in resolving your tax issues effectively.

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• Phone: 1-800-987-3051
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Don’t wait until it’s too late to address your tax issues. Contact Tax Alliance now to get the expert help you need to navigate the complexities of IRS asset seizures and safeguard your financial future.