Riverside IRS Seizures of Assets

Riverside IRS Seizures of Assets

IRS asset seizure is a legal procedure where the IRS takes possession of a taxpayer’s property to satisfy outstanding tax debts. This action is typically a last resort after the IRS has exhausted other collection methods, 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.

Why the IRS Seizes Assets

The IRS seizes assets to enforce compliance with tax laws and ensure that taxpayers meet their tax obligations. The process usually begins with the IRS assessing the tax liability and sending a notice demanding payment. If the taxpayer fails to respond or make arrangements to pay the debt, the IRS will issue a final notice of intent to levy and provide the taxpayer with an opportunity to request a hearing. If the debt remains unresolved, the IRS proceeds with the seizure of assets. The primary reasons for IRS asset seizures include:

• Unpaid Taxes: The most common reason for asset seizure is unpaid federal taxes, which can include income taxes, payroll taxes, and other federal tax obligations.
• Non-compliance: Repeated failure to comply with tax laws and ignoring IRS notices and demands for payment.
• Legal Judgments: Court judgments against the taxpayer for unpaid taxes can also lead to asset seizures.

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 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.

Strategies to Prevent and Address Asset Seizures

Payment Plans and Installment Agreements

One effective way to prevent IRS asset seizures is by negotiating a payment plan or installment agreement. This allows taxpayers to pay off their debt over time in manageable installments rather than facing immediate asset seizure. Key steps include:

• Contact the IRS: Initiate contact with the IRS to discuss your financial situation and propose a payment plan.
• Submit Form 9465: Use IRS Form 9465, Installment Agreement Request, to formally apply for a payment plan.
• Provide Financial Information: You may need to submit a detailed financial statement, such as Form 433-A or Form 433-F, to demonstrate your ability to make monthly payments.
• Negotiate Terms: Work with the IRS to determine a monthly payment amount that you can afford while ensuring the debt is paid off within a reasonable time frame.

Offer in Compromise

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that allows the taxpayer to settle their tax debt for less than the full amount owed. This option is typically available to taxpayers who cannot pay their full tax liability or doing so would create financial hardship. Key points include:

• Eligibility: To qualify, you must demonstrate that you cannot pay the full tax debt or that paying the full amount would cause financial hardship.
• Submitting an Offer: Complete and submit Form 656, Offer in Compromise, along with Form 433-A (OIC) or Form 433-B (OIC), which provide detailed financial information.
• Offer Amount: Propose an offer amount based on your income, expenses, asset equity, and ability to pay.
• Review Process: The IRS will review your offer and financial situation to determine if it is acceptable. This process can take several months.

Bankruptcy

Filing for bankruptcy can provide immediate relief from IRS asset seizures and help manage overwhelming tax debt. There are two main types of bankruptcy filings that can impact tax debt:

• Chapter 7 Bankruptcy: This type involves liquidating non-exempt assets to pay off debts. Certain tax debts may be discharged if they meet specific criteria, such as being more than three years old and having been assessed at least 240 days before filing.
• Chapter 13 Bankruptcy: This type involves creating a repayment plan to pay off debts over three to five years. It allows you to keep your assets while making manageable payments toward your tax debt.

Legal Representation and Professional Help

Navigating the complexities of IRS asset seizures and tax debt resolution can be challenging without professional assistance. Seeking help from experienced tax professionals and legal representatives offers several benefits:

• Expert Knowledge: Tax professionals have in-depth knowledge of IRS procedures, tax laws, and available relief options.
• Effective Negotiation: Professionals can negotiate with the IRS on your behalf, seeking favorable terms for payment plans, offers in compromise, or other resolutions.
• Comprehensive Support: From gathering necessary documentation to representing you in hearings, professionals provide full support throughout the entire process.
• Peace of Mind: With professional assistance, you can reduce stress and focus on resolving your tax issues effectively.

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.

• 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.