Can the IRS take my retirement accounts because I owe unpaid taxes?

When you calculate your federal income tax, it is not unusual to find that you owe money to the Internal Revenue Service (IRS).  Even though they have been taking tax out of your paycheck throughout the year, if the amount withheld was not enough, the amount you owe can be significant.  If you find that you cannot afford to pay the tax liability you owe and you are considering not filing your taxes or not working with the IRS to establish a payment plan, you should be aware that the IRS has powerful authority to collect the tax from you.

The IRS counts on the taxes it collects to fund the federal government.  Therefore, when taxpayers do not pay their fair share, the IRS considers it a serious matter.  The Internal Revenue Code grants the IRS broad powers to place a levy on the assets of a taxpayer who has not paid their taxes and is not willing to work with the IRS to make payments.  An IRS levy gives the IRS authority to seize your assets.

What assets you may be wondering?  Technically, any of your assets are subject to an IRS levy.  This includes your checking and savings accounts, jewelry, family heirlooms, and furniture.  If you are fortunate enough to have luxury items such as a vacation home, a boat, or an expensive sports car, they are fair game for the IRS to seize and sell.  Even your home and retirement accounts can be taken in extreme circumstances.

In the case of retirement accounts, it does not matter whether it is your Social Security benefit, an IRA, your 401k, or your pension.  If it has value, the IRS can seize it to use the funds to pay off your tax liability.

However, even though the IRS technically has the authority to seize any of these assets, it would prefer to establish a payment plan with the IRS.  The IRS will only resort to seizing your property after sending numerous warnings and finding that the taxpayer is avoiding paying the tax and is unwilling to work out a payment arrangement.  Even if the IRS has to seize your property, they will take other assets besides your home and retirement accounts if at all possible, as the IRS understands the difficulty the loss of a home or retirement accounts can cause in someone’s life.

If I foresee issues paying my tax liability, how can I get help?

A tax attorney can provide you help if you have a tax debt that you cannot afford to pay.  Tax attorneys have years of training and experience with situations similar to yours, so they will know what to expect when working with the IRS and can provide advice specific to your tax issues.

If you complete the short form below, a tax attorney will contact you to discuss your situation free of charge.  This initial consultation is completely confidential and does not obligate you to anything further.  But it can be the first step in getting relief from your tax burden, so please take the opportunity to get help today.

by Mark Johnston

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.