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Can the IRS Just Take My Stuff?

When you are going up against the competition, wouldn’t it be nice if you could get the other guy’s playbook? Well, when you are dealing with the IRS, you can actually do just that. The IRS issues an Internal Revenue Manual (IRM) to its employees, and the manual is available to the public. When you are dealing with the IRS’ Collection Division, this can be quite helpful. The manual is easily accessible here.   In particular, Internal Revenue Manual Section 5.10.1, Pre-Seizure Considerations, can assist you in determining how far the IRS can go. Here are just a few things noted in this section of the IRM:

  1. The IRS cannot levy you when you are in an installment agreement, including the time the payment plan is pending, or during any appeal of a rejected or terminated installment agreement.
  2. If you do not have any equity in your property, the IRS cannot take it. For example, the IRS can’t take your house if it’s worth $250,000 and you owe $250,000 on it – there is no equity.  
  3. If you have filed an Offer in Compromise, the IRS cannot levy or seize your assets while it is pending, or during any appeal of an OIC rejection.
  4. The Internal Revenue Code prevents the IRS from taking your clothing, household goods, and certain business tools and equipment. IRM 5.10.1 recognizes that the IRS cannot seize these specific assets.
  5. The IRS cannot take your house unless the government first sues you in court and receives a judge’s approval to take it.  
  6. If you have an innocent spouse claim filed with the IRS, they cannot collect until a decision is made on whether you should be held responsible for your spouse’s taxes.
  7. If you disagree with the IRS on a collection decision, you have the right to appeal it and have the IRS Office of Appeals reconsider. This includes Collection Due Process Appeals and Collection Appeals Program. The Internal Revenue Manual prevents the IRS from levying while your appeal is pending.
  8. When you are in bankruptcy, IRS collection is put on hold. This, too, is recognized by the Internal Revenue Manual.
  9. The IRS cannot levy unless they give you notice 30 days ahead of time. This is called a Final Notice of Intent to Levy. Once the IRS sends this notice, you have additional rights to file an appeal and stop the levy from occurring. Don’t lose this right by ignoring this notice. You are given 30 days to appeal the levy and the 30 days is not extendable.

When you need to know what the IRS cannot do in a collection matter, reference the Internal Revenue Manual 5.10.1, and defend yourself under the Service’s own rules.

 

Daniel Gibson provides accounting, tax planning and consulting services to real estate and services industries and is a member of the AICPA and New Jersey Society of Certified Public Accountants.

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