What Can the IRS Seize?
A non-wage levy seizes the taxpayer’s right, title and interest to all property that is in the possession of the levied party (the person or company holding your property for you) at the time the levy is served. It seizes no more and no less.
The exemptions from levy are few and meager, but they exist and consist of the first (sometimes the last) line of defense against the levy. So one of your first steps is to check whether any of the statutory exemptions applies. Generally, you get the shirt on your back (wearing apparel, books and tools of a trade up to $3,125 (adjusted for inflation for calendar years after 1999), unemployment benefits, fuel, furniture, and personal effects up to $6,250 (adjusted for inflation for calendar years after 1999), school books, undelivered mail, some annuity and pension payments, worker’s compensation, salary sufficient to satisfy child support payments, certain disability payments and Job Training Partnership Act payments, your principal residence (in most cases) and a minor amount of salary or other income.
The IRS can seize nearly everything, with some exceptions. All real, personal, tangible and intangible property which the taxpayer owns or in which you have a property interest is vulnerable to the IRS’s levy. A good rule of thumb is: if the taxpayer owns it (in whole or in part), the IRS can get it. There are important exemptions, but that is a good starting point. One of the most important exceptions is the taxpayer’s personal residence. A levy is allowed on a taxpayer’s personal residence only if a District Director or Assistant District Director of the IRS personally approves in writing of the levy. Also excepted is the taxpayer’s vested interest in a retirement plan. The current levy form, Form 668, excludes the taxpayers vested interest in a retirement plan by preprinted language. The IRS must affirmatively strike over that language to seize retirement accounts.
A typical way for a levy to occur is when there has been a tax lien filed after a tax audit. Bills start arriving from the IRS and they are either ignored or go unpaid or both. Then it happens–a tax levy notice arrives. A levy is a precursor to selling your seized property at public auction. Call us without delay if you find yourself in the jaws of an IRS levy.
Tags: Beating The Tax Man