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Planning Intermediate: Surviving IRS Tax and Audit Challenges

Introduction to Surviving IRS Tax and Audit Challenges What if I Can't Pay My Tax Bill? Audit Flags: Tax Preparation Audit Flags: Deductions and Credits What Happens during an IRS Audit? How to Survive an IRS Audit What Can the IRS Take from Me if I Can't Pay My Taxes? Summary of Surviving IRS Tax and Audit Challenges
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What Can the IRS Take from Me if I Can't Pay My Taxes?

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What Can the IRS Take from Me if I Can't Pay My Taxes?

While IRS audits are dreaded, there is one final step that truly strikes fear into the hearts of taxpayers: the tax levy. A tax levy is an action by the IRS in which it seizes your property in order to satisfy your tax debt. It’s the end of the fight for you, the taxpayer. A levy is not the same as a lien. A lien is a claim on property and is used as security for debt; a levy actually takes the property to satisfy the debt.

Things To Know

  • In a tax levy, the IRS seizes your property in order to satisfy your tax debt.
  • The IRS does everything it can to work with taxpayers in order to avoid tax levies.

The IRS may seize and sell your property if you do not pay your taxes or make arrangements to pay them.

So what can the IRS take from you? Basically, any kind of asset that is real or personal. Anything that you own that has equity in it is fair game:

  • Wages
  • Bank accounts
  • Social Security payments
  • Accounts receivable
  • Insurance proceeds
  • Federal and state tax refunds
  • Real property
  • Vehicles
  • Your home
  • Property that you own that is held by someone else, such as the cash value of a life insurance policy

But it does not happen willy-nilly; there are required procedures that are followed and approvals that are needed. The IRS will be sending you notices during the process. You have the right to ask for a review of your case, you can file appeals, and you may request a hearing. Seizing your assets is a last resort that is used after all other options have failed.

Publication 1660, Collection Appeal Rights, explains the appeal process in more detail.

It should be noted that the IRS does everything it can to work with taxpayers in order to avoid levies. Levies cost money and take up time and resources. In the event that the IRS needs to seize your house, it certainly doesn’t like the publicity, and it only takes your house as a last resort. It is therefore to a taxpayer’s advantage to stay in communication with the IRS and work out some type of payment plan; some taxpayers refuse to cooperate out of indignation, anger, a sense of entitlement, or just plain fear. But communication might be all that’s needed to keep one’s property.