It is a well-established fact that the Internal Revenue Service is an agency with a lot of power, which has the ability to take a number of actions against taxpayers in order to collect tax debts. So, if you owe money to the IRS in back taxes or outstanding taxes, there are situations where the agency may seize your home or business in order to collect what you owe.
How the Collection Process Works
If you owe the IRS money, the agency will initially contact you via snail mail with a bill that contains details about your tax debt. You may already be looking at penalties and interest if your taxes were overdue. So, the longer you fail to pay your overdue taxes, the more penalties you will incur and the larger your tax debt will become. At this stage, you would be well advised to pay what you can in order to avoid further interest and penalties. You do not want the amount you owe to balloon into this large, unmanageable thing.
So, if the amount you owe is already intimidating, it is important that you contact the IRS to negotiate what is known as an offer-in-compromise where the IRS will review your finances and reduce the amount so you pay less than what you owe and settle the matter. Or you may be able to arrange to pay it all off with a monthly installment plan. However, it is important you take the initiative to contact the IRS and negotiate a suitable plan with them. If not, they will likely initiate a collection process, which could lead to liens affecting your business and home.
Can the IRS Take Your Home and Business?
Yes, the IRS has the power to seize your home and business under tax laws. If you owe the IRS tax debt and fail to pay in a timely manner, the agency can enforce levies, seizures and even a public sale of your home and business – all authorized by federal law. There are very few assets that are exempt from IRS seizure.
However, you should know that there is a protocol that the IRS must follow for such types of seizure. First, they must seek and obtain your permission to enter your property. If you give permission, the seizure will happen as they propose. If not, the IRS will seek a court order to seize your property. Once the order is obtained, IRS officers will come into your property, allow you to gather your personal belongings and then padlock the property and post notices to the public about the closure. The properties seized in this manner are typically sold in a public auction.
How Can You Avoid This Tragedy?
This is without question, an extreme situation, which can be avoided. Seizures by the IRS can be avoided with proper communication between taxpayers and the IRS. A majority of taxpayers will be able to successfully negotiate a payment or file for bankruptcy protection. If you are in a tight spot, call an experienced Virginia tax lawyer who will advocate on your behalf and advise you regarding steps you can take to protect the property and assets you’ve worked so long and hard to acquire.