Santa Ana IRS Seizures of Assets

Santa Ana 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.

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.

Legal Protections and Exemptions

Exempt Property

Federal law provides protections for certain types of property, ensuring that some assets remain exempt from IRS seizure. These exemptions help ensure that taxpayers are not left destitute and can 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.

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

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. Acting promptly 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.