If you are a taxpayer, you know that not paying taxes can have serious consequences. But did you know that one of them could be the seizure of your home? Many people are unaware that the Internal Revenue Service (IRS) has the power to take your house away from you if you do not pay your taxes.
This blog explores the reality of the IRS seizing homes, can the IRS take your house, and what you can do to protect yourself.
What Is the IRS Seizure of Homes?
The IRS seizure of homes is a process by which the Internal Revenue Service can take away a person’s home if they fail to pay their taxes. The IRS can seize any property owned by a taxpayer who owes delinquent taxes. This includes the taxpayer’s primary residence. The IRS can also seize a second or vacation home and any other real estate the taxpayer may own.
Does the IRS Have the Right to Seize Your Home?
It’s a frightening prospect that many people don’t know much about. But does the IRS have the right to seize your home? Here are five things to know about IRS home seizures.
Collection of Delinquent Tax Debt
The first thing to understand is that the IRS only has the power to seize property, including homes, to collect on a delinquent tax debt. This means the IRS won’t take your home if you owe them a few hundred dollars. Generally, the IRS needs to have a large outstanding debt that has been delinquent for some time before it can take any drastic action.
Notice of Intent to Levy
Before the IRS can seize any property, they must notify the taxpayer of the intent to levy. This document will explain the taxes owed and the deadline for paying the debt. This notice will also explain the taxpayer’s rights and how to dispute the levy.
Appeals and Disputes
The taxpayer can dispute the levy and file an appeal with the IRS. The appeal should include evidence that explains why the taxpayer should not have to pay the debt. This evidence can include financial hardship, medical bills, or other evidence that shows the taxpayer cannot pay the debt.
Third-Party Liens
The IRS can file a lien on a person’s property, giving them the right to seize it if the debt is unpaid. This lien applies to any third party claiming the property, such as a bank or mortgage company. This means that if a person has a mortgage on their home, the IRS can seize the property if the debt is not paid.
Payment Plans
The IRS does offer payment plans for taxpayers who owe back taxes. These payment plans can help the taxpayer avoid having their home seized. It’s important to note that the payment plans must be paid in full and on time to be effective.
What Can I Do to Protect My Home?
The IRS has the authority to take your property, including your home, if you owe back taxes. If you do not have the money to pay your taxes, here are five ways to protect your home from IRS seizure:
1. File Your Tax Return on Time
The best way to avoid the IRS seizure of your home is to file your tax return on time. Filing late can result in hefty fines, penalties, and a potential IRS seizure of your home. To avoid complications, file your tax return before the due date.
2. Negotiate an Installment Agreement
You can negotiate an installment agreement with the IRS if you cannot fully pay your taxes. This will allow you to make payments over time instead of paying the entire amount simultaneously. The IRS will agree to an installment agreement if they believe they can recover the debt.
3. Make an Offer in Compromise
If you cannot afford to make payments on an installment agreement, you can make an offer in compromise. This is an agreement between you and the IRS in which you agree to pay less than what you owe in taxes. The IRS will decide whether or not to accept your offer based on your ability to pay and the likelihood of them recovering the debt.
4. Set Up a Payment Plan
If you cannot make payments on an installment agreement or an offer in compromise, you can set up a payment plan with the IRS. This monthly payment plan will allow you to repay your tax debt over time. The IRS will review your financial situation to determine how much you can afford each month.
5. Request a Collection Due Process Hearing
If the IRS has begun seizing your home, request a Collection Due Process Hearing. This is a hearing before an independent administrative law judge who will review your case and determine whether or not the IRS has the legal authority to seize your property.