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What Property Can the Tax Authorities Seize?

Posted on in Taxation Law

delinquent tax debt, San Jose delinquent tax attorney, back taxes issues, IRS property seized, tax debtIf you have a delinquent tax debt, the Internal Revenue Service (IRS), California Franchise Tax Board (FTB), or California Board of Equalization (BOE) may have the power to take your property. This power to seize, or levy, your assets is why you should seek to remedy the delinquency as soon as possible through an installment agreement or other means.

The levy process is meant to satisfy your tax debt. The IRS, FTB, or BOE may seize your property and sell it, if necessary, and apply the proceeds to your delinquent taxes. The cost of the sale may also have to be paid by the taxpayer through the levied property.

The following property is subject to seizure:

  • Wages, salary, or commission. Dividends and payments on promissory notes are also subject to seizure. Your wages can be levied continually until your tax obligation is paid in full.
  • Bank accounts. Usually, a bank will hold the funds in your account for 21 days to allow for any disputes as to who owns the funds, which may give you time to work with the IRS in order to find another way to fix the delinquent tax situation.
  • Retirement accounts. The amount available to be seized will depend on the funds to which you have a vested right. 
  • House and car. Before the IRS, FTB, or BOE sells these items, it will calculate a minimum bid price, and you will have the chance to challenge the fair market value determination. After public notice requirements are met, the assets will be put up for sale and any proceeds will go to satisfy your tax debt. If there are any leftover funds, you will be eligible for a refund. 

Also, the government will employ a special procedure for seizing a piece of property if it is your primary residence. In many cases, it is not advantageous for the IRS to seize a piece of property if there is a mortgage on the property and little equity in the home.

Property not subject to seizure includes:

  • Unemployment benefits;
  • Some annuity and pension benefits;
  • Some service-connected disability benefits for veterans;
  • Workers’ Compensation benefits;
  • Some public assistance payments; and
  • Income for child support payments that are court ordered.

Additionally, the IRS cannot seize property if you have an installment agreement, offer in compromise, or economic hardship as determined by the IRS.

Call a California Delinquent Tax Lawyer

There are ways to avoid having your property seized by the IRS, FTB, or BOE and a tax attorney can advise you on the most advantageous ways to resolve your back taxes issues.

The accomplished San Jose delinquent tax attorney at John D. Teter Law Offices can be reached at 408-866-1810.

Sources:

https://www.irs.gov/pub/irs-pdf/p594.pdf

https://www.irs.gov/businesses/small-businesses-self-employed/what-happens-after-my-property-is-seized-and-how-do-i-get-it-back

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