The IRS has vast authority to enforce the US tax code. Included in that authority is the power to seize property to satisfy outstanding tax assessments. While the seizure power exists, it is often misunderstood and is rarely used.
How IRS seizures happen
IRS seizures happen when there is a tax assessment that remains unpaid. The IRS will likely attempt to negotiate a settlement or repayment prior to seizure. If they are not successful, then enforced collections begins in the form of levies and liens. If traditional collection methods don't work and an IRS field collection agent (Revenue Officer) believes there to be assets the taxpayer owns, a seizure process can be initiated.
Will the IRS seize your home?
The IRS can seize your home, but they don't want to. They would rather work out a deal based on your collection potential. That collection potential includes the cost of reasonable housing. If your house cost is reasonable and you are working towards a solution with the IRS, your house is likely safe.
How can you get your seized property back?
The IRS claims you get get your seized property back if you can prove one of these reasons. The IRS is required to release a seizure if it determined that:
- You paid the amount you owe,
- The period for collection ended prior to the seizure being issued,
- Releasing the seizure will help you pay your taxes,
- You entered into an Installment Agreement and the terms of the agreement do not allow the seizure to continue,
- The seizure creates an economic hardship, meaning the IRS has determined the seizure prevents you from meeting basic, reasonable living expenses, or
- The value of the property is more than the amount owed and releasing the seizure will not hinder our ability to collect the amount owed.
However, some of these reasons are subjective. Items, 3, 5, and 6 all require a subjective determination. And because the seizure process is so time-consuming for the IRS, they are often quite reluctant to undo something. That is, they are not necessarily looking to do favros for taxpayers who made them do all the work of a seizure.
What about property overseas, can the IRS seize that?
While the IRS imposes a worldwide taxing jurisdiction, in practically, it is incredibly difficult for them to seize property overseas. What they can do is seize your passport if you owe more than $50,000. If you moved property overseas to avoid a seizure, the IRS can make the claim that this is an willful act to defeat the US tax, which is a crime.
However, for those living overseas, it will be very difficult for the government to seize your overseas assets. They will need to convince a foreign juriidiction to allow for a legal resident of their county to be impacted. That will be very hard to do.
