Irvine IRS Seizures of Assets

Irvine 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.

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 process of IRS asset seizure begins with the issuance of a Notice of Intent to Levy. This notice serves as a formal warning to the taxpayer that the IRS intends to levy their assets to satisfy unpaid tax debts. The steps and timelines involved include:

• Initial Notice: The IRS first 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 indicates 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 allows 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.

Legal Protections and Exemptions

Exempt Property

Federal law provides protections for certain types of property, which are exempt from IRS seizure. These exemptions ensure that taxpayers are not left destitute and can still maintain a basic standard of living. Key exempt properties include:

• Necessary Clothing: Essential clothing items for daily living.
• School Books: Books and materials required for the education of the taxpayer's dependents.
• Tools of Trade: Tools and equipment necessary for the taxpayer's trade or business, up to a specified value.
• Unemployment Benefits: Payments received as unemployment compensation.
• Undelivered Mail: Mail that has not yet been delivered to the taxpayer.
• Certain Pension and Retirement Accounts: Most pension plans and retirement accounts are protected, although some exceptions apply.
• Workers’ Compensation: Benefits received under workers' compensation laws.
• Minimum Living Allowance: A portion of wages, generally equivalent to a minimum living amount, is exempt to ensure the taxpayer can meet basic living expenses.
• Public Assistance Benefits: Payments received under public welfare programs.

Appeals and Relief Options

If the IRS issues a notice of intent to levy or seizes assets, taxpayers have the right to appeal the action and seek relief. Options include:

• Collection Due Process (CDP) Hearing: Taxpayers have the right to request a CDP hearing within 30 days of receiving a final notice of intent to levy. During this hearing, taxpayers can contest the levy, propose alternative payment arrangements, and present their case before an independent officer.
• Offer in Compromise (OIC): Taxpayers can negotiate a settlement with the IRS to pay less than the full amount owed. The IRS considers factors such as income, expenses, asset equity, and future earning potential.
• Installment Agreement: Taxpayers can set up a payment plan to pay off their tax debt over time. Once an installment agreement is in place, the IRS typically suspends levy actions.
• Currently Not Collectible (CNC) Status: If a taxpayer can demonstrate that paying the tax debt would cause significant financial hardship, the IRS may temporarily halt collection efforts by placing the account in CNC status.
• Appeal to the IRS Office of Appeals: If a taxpayer disagrees with the results of a CDP hearing or other IRS actions, they can appeal to the IRS Office of Appeals for further review.

Innocent Spouse Relief

Innocent Spouse Relief provides protection to individuals who filed joint tax returns but were unaware of errors or omissions made by their spouse. This relief can prevent the IRS from seizing assets to cover tax debts that are solely attributable to the other spouse. Key points include:

• Eligibility: To qualify, the taxpayer must demonstrate that the understatement of tax was due to erroneous items of the other spouse, and they were unaware of the errors when signing the return.
• Types of Relief: There are three types of innocent spouse relief:
  • Traditional Innocent Spouse Relief: Relieves the taxpayer from additional tax liability if they were unaware of the error.
  • Separation of Liability Relief: Allocates the additional tax liability between the spouses based on each individual's responsibility.
  • Equitable Relief: Provides relief when traditional innocent spouse relief and separation of liability relief do not apply, but it would be unfair to hold the taxpayer responsible for the additional tax.
• Application Process: Taxpayers must file IRS Form 8857 (Request for Innocent Spouse Relief) and provide detailed information about their situation.

How Tax Alliance Can Help

Facing the threat of IRS asset seizure can be incredibly stressful and overwhelming, but you don't have to navigate this challenging situation alone. Take control of your financial future by contacting Tax Alliance for expert guidance and support.

We encourage you to reach out to 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. Taking action now can make a significant difference in resolving your tax issues effectively and safeguarding your assets.

• Address: 2002 E. McFadden Avenue, Suite 110, Santa Ana, CA 92705
• Phone: 1-800-987-3051
• Email: info@taxalliance.com
• Website: Tax Alliance

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.