Dec 1, 2007

Does the IRS seize my property if I have Tax Debt?

If you do not reply, they will try. It will most likely not be like Grandma in “Happy Gilmore” where they take your house, but, technically, a levy is a seizure of property.

Here is the process:

1. You incur tax debt- either by filing a return and self assessing, the IRS filing a return for your (an SFR), or as a result of additional liability from an audit
2. The IRS sends you a balance due notice- this will come within 60 days of the assessment of tax
3. The IRS makes you into a TDA- Taxpayer Deliquency Account and starts sending letters in progression - CP 501, CP 503, CP 504 (sent certified)- this process can take from 40 days to 120 days depending on your situation
4. You do not respond- the IRS makes you into a TDI- Taxpayer Deliquency Investigation and starts to ENFORCE collection- about 10-25 days after your CP 504 (Certified Letter) is sent to you.
5. You are now in collections- this is when the levy seizure starts- the IRS issues you a L1058 (or equivalent if they are specifically looking to levy a specific income source or asset). You have 30-40 days after that date (depending on the source- whether it is automated or by a physical person- i.e. a Revenue Officer) until you are levied.
6. The IRS then issues a Form 668 (there are several forms of this depending on what the IRS is trying to levy) and your wages are immediately garnished (by the way- garnishment is a nice word for SEIZURE) or your bank accounts frozen (for 21 days and then the funds are sent to the IRS).

The IRS had under 600 actual seizures last year (actually 590 according to the IRS)of physical property (i.e. homes, etc.). However, they issued over 3.7 million levies. It is cumbersome and not cost effective for the IRS to physicial take possession of your property and sell it. Forthermore, they do not need to: they have the power of levy.

In any event, if it has gone this far, you need professional help as your tax matters are more than you can handle.

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