The IRS has been called the world’s largest collection agency. When you owe back taxes, or when they even think you owe taxes, the IRS can go to great lengths to collect your bank accounts, wages and investments. If they fail at this, they may seize your other assets.
The biggest worry about IRS seizure of assets is that most people have a lot of different assets for the IRS to seize. You’re vulnerable in many ways, and it might not always be certain where the IRS will strike.
For example, you probably have a clear paper trail leading to all of your bank accounts, as well as investments such as stocks and bonds. The IRS usually won’t try to seize your 401k or other retirement accounts, but in extreme cases they are allowed to do so. Among other assets, the IRS can also seize the cash value of a life insurance policy.
Imagine the trauma if you go to the ATM one day and find that you can’t withdraw money because you have a zero balance. The IRS can levy your bank accounts and clean them out with little warning. Your checks will start to bounce, and you may not be able to pay your bills or your mortgage.
Over the course of a few weeks or months, this could wreak havoc on your financial well-being and your reputation, and it could take years to clean up the mess. It’s better to attempt to stop the seizure of assets before it happens, and an experienced tax attorney can be your best line of defense.
Since financial institutions usually cooperate with the IRS, your securities and other “paper” wealth might be the first place where the agency attempts to seize your assets. But it’s not their only option.
How The IRS Uses Liens To Seize Your Assets
The IRS has the power to issue a lien on most of the physical property you own. This means you may run the risk that the IRS could seize your house or your car. Boats, trailers and other vehicles could also be subject to seizure.
A lien is simply a legal claim to some of your personal wealth. It’s often the first step in seizures of assets. A lien “attaches” to almost any asset you own that has a market value. Assets that aren’t immediately seized may be grabbed later when your personal circumstances change.
For example, the IRS may be reluctant to seize your home. But if you move and attempt to sell the house at a future date, the IRS might demand the proceeds from the sale. They could even seek to collect from the buyer!
A lien may sometimes hinder your attempts to use or sell an asset. Depending on the circumstances, a tax attorney may be able to delay or stop the process. A tax attorney may also be able to uncover future attempts to seize your assets before a seizure actually happens.
You can watch the IRS in action as they take away a frantic citizen’s car:
If you want to enjoy the fruits of your labor, you should probably consider hiring a tax attorney to protect you fromIRS seizures of assets.