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Is asset seizure a risk in the debt recovery process?

On Behalf of | Apr 14, 2022 | Tax Debt

When struggling with tax debt, many Americans are shocked to realize the broad authority exhibited by the IRS when it comes to collections efforts. Often, the agency will first explore the possibility of liens, levies and the retention of future tax refunds. With numerous options at their disposal, the IRS generally only views asset seizure as a last resort, but it is clearly a possibility in many cases.

Albeit a last resort, seizing assets is one of the most powerful collection tools the IRS has at its disposal. While cash assets are generally the first options in the arsenal, the IRS often turns its attention to the seizure of property that they can ultimately sell toward debt recovery. Even though this is an extreme action, fortunately, individuals are protected by a strict path and rigorous procedures.

Can a taxpayer lose their house, car or business to the IRS?

Unfortunately, the simple answer is yes.

It is not uncommon for tax debt to grow out of control as many individuals find themselves in a quickly deepening hole from which there seems no escape. Instead of working with the IRS, under the guidance of a skilled attorney, to negotiate a compromise, some people decide to simply go about their daily lives assuming the issue will go away. Unfortunately, this never happens, and the problem only gets worse.

From an offer in compromise, innocent spouse relief or disputing the original tax liability in its entirety, individuals are better served by simply working with the IRS to correct the situation.

Are certain assets exempt?

From physical property to financial assets, the IRS has numerous options at their disposal. While every situation is unique, there are certain sources of income the IRS typically considers off limits for seizure. These can include unemployment benefits, workers’ compensation benefits and money that comes in the form of child support payments. Depending on an individual’s unique situation, other income such as pensions and veteran disability are generally untouched.

Faced with asset seizure, an individual can often feel overwhelmed by IRS tax debt. It is wise to discuss your unique situation with an experienced legal professional who can provide guidance tailored to your specific financial concerns.