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Can the IRS take my home because I owe unpaid taxes?
If you owe money to the Internal Revenue Service (IRS) related to your federal income taxes, it can become a very serious financial matter. If you do not pay the money you owe, the IRS can seize your possessions, possibly including your home. How can they do this? Read on to find out more about the process, as before the IRS can seize your home (and for that matter is willing to take such a serious step), a number of things have to happen.
First, if you owe money to the IRS, the IRS will make every effort to be sure you are aware that you have an unpaid tax liability. It is not unusual for there to be a simple misunderstanding on the part of a taxpayer, especially if it is the first time a taxpayer has ever had to pay taxes, they have not had to pay taxes in a long time, or the taxpayer filed an extension. For example, a new taxpayer may simply not have known that they need to pay their tax liability at the time they file their taxes. Or if the taxpayer has never filed an extension before, they may not have realize that the tax liability must still be paid on April 15. When the unpaid tax liability is a simple misunderstanding, a notice to the taxpayer about the unpaid tax is often enough to illicit payment.
Second, if you do not respond to the IRS’ initial notification that there are unpaid taxes or to their follow-up communication, it will become apparent to the IRS that you are not willing to work with them in addressing the tax liability. Usually when the IRS seizes the possessions of a taxpayer, it occurs in situations where the taxpayer is unwilling to work with the IRS to establish a payment plan or otherwise address the tax liability.
Third, the IRS will provide you a notice of their intent to place a levy against your property and then obtain that levy. A levy allows the IRS to take your property to satisfy the tax debt. This property can include your bank accounts, wages, vehicles, and other personal property, including your house.
The IRS is aware that seizing the home of a taxpayer can cause a significant hardship in the life of the taxpayer. Therefore, they will not do so unless they have no other options. This means the taxpayer has to willfully continue to not work with the IRS to establish a payment plan to pay the taxes and that other assets of the taxpayer are simply not sufficient to satisfy the tax debt.
As you can see, it takes a concerted effort on the part of a taxpayer to drive the IRS to seize their home. So long as you file your taxes, even when you cannot afford to pay them, and are willing to work with the IRS to agreed to a payment plan, you can avoid having your home seized by the IRS.
Should I speak with a tax attorney if I owe money to the IRS that I cannot afford to pay?
If you are not able to pay your tax liability to the IRS, it is a good idea to hire a tax attorney. A tax attorney will have experience in working with the IRS to address unpaid tax liability. They will be able to provide you guidance on your tax situation and what the best options are for you to address the deficiency.
If you complete the short form below, a tax attorney can review your situation free of charge and with complete confidentiality. This review does not obligate you to anything further, yet it will provide you with an idea of what the best steps are for your situation. Therefore, please take a few moments to complete the form to get the help you need to address your unpaid tax liability.
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.