IRS Asset Seizures In The Carolinas: When And Why They Happen

In this article, you will discover:

• The most commonly seized assets in the Carolinas.
• The types of property and business assets that are at greatest risk of seizure in the Carolinas.
• Rights that Carolina taxpayers have before their seized assets are sold.

How Common Are IRS Asset Seizures In The Carolinas?

Asset seizures are a nationwide, federal issue. They’re no different in North Carolina or South Carolina than anywhere else. To determine how common asset seizures are, you first need to know what kind of assets are being seized.

The most common asset seizures involve bank account levies and wage garnishments. Those are the easiest to levy, and the IRS threatens to use them daily. It takes more effort and additional steps for the IRS to seize real estate or personal property, such as seeking court approval by filing lawsuits against taxpayers.

Other commonly seized assets are federal funds that individuals or companies receive from Social Security or Medicare programs. If those individuals or companies already owe taxes, the government acts on those more quickly through the Federal Payment Levy Program. They can even do that prior to granting individuals and businesses due process appeal rights.

What Types Of Property And Business Assets Are Most At Risk Of IRS Seizure?

Seizure Of Business Assets

The IRS has the ability to seize your business’s property or assets, though this is rare. Most of the time, you’re able to work out an arrangement with the IRS before that happens.

If you have an asset used to produce income, the IRS will generally allow you to continue using it to produce that income. However, there are situations in which the IRS seizes your business’s equipment or property and auctions it off, especially if you are ignoring notices or failing to address the back taxes.

Other Types of Property The IRS Can Seize Or Levy

The IRS can seize more than your business’s equipment. It has broad authority to seize a wide range of property and assets.

“Property” can include bank accounts, wages, income from contracts, accounts receivable and vehicles. For individuals, the IRS can seize or levy retirement funds, IRAs and 401(k)s.

Wage levies are continuous obligations that an employer must comply with. Until they’re released, an employer must send a portion of an employee’s paycheck every payday.

Bank levies are one-time, one-shot levies. The bank must hold whatever funds are in your bank account at the time of the levy for 21 days. If the bank doesn’t receive a release from the IRS within that time, it must send that balance to the IRS. You can request a release of funds from your account if you need them for specific personal expenses. In those instances, the IRS will often release a portion of them.

Seizure Of A Principal Residence

If the IRS wants to seize your principal residence, it must go through a federal judge or magistrate to get written approval. Seizure of a principal residence is not common, but when it happens, you always have the opportunity to go to court and argue against it.

Exemptions To Levies

There are certain exemptions to IRS levies that you can claim. These include tools of the trade for generating income, as well as some unemployment benefits and workers’ compensation. Under these exemptions, the IRS cannot levy the full amount.

Does The IRS Have To Give Notice Before They Seize Property?

After the IRS assesses the amount you owe, they must send you a Final Notice of Intent to Levy before they can take your wages, bank accounts or other property. The IRS is only required to send notice once per tax period. Once they send it, even years later, they can levy on that prior tax period without sending an updated notice.

That notice also includes your right to a hearing, referred to as your Collection Due Process appeal rights. You have 30 days from the date of that notice to appeal.

You must exercise those rights within the 30-day time frame if you want to block the IRS from issuing bank levies or wage garnishments. You also have the right of further appeal to the United State Tax Court if you disagree with the outcome of the collection due process hearing.

What Rights Do Taxpayers Have Before Seized Assets Are Sold?

If the IRS intends to seize or sell real estate or other property, you have specific rights. First, they must provide you with written notice of the seizure, sale and upcoming auction. If they seek to seize or sell your principal residence, they must first obtain court approval.

You also have the right to a collection due process hearing. If you file for that hearing in a timely fashion, the IRS must halt any attempt at seizure or sale, whether it’s a bank account, wages or any other asset. Requesting a hearing will give you time to gather the information you need to work out an alternative arrangement with the IRS.

In addition to the collection due process appeal, there is the Collection Appeal Program (CAP). CAP differs from the Collection Due Process in the following ways:

• It’s a quicker way to address a disagreement with the IRS
• It does not block the IRS from seizing your property
• There are no judicial reviews
• There are no opportunities for you to go to tax court

Lastly, you can file an Offer in Compromise or an installment agreement to prevent a levy. The IRS cannot levy while a review is pending.

How Can Timely Legal Action Stop Or Prevent An IRS Asset Seizure?

In summary, you can prevent IRS asset seizure by:

• Filing for a Collection Due Process appeal hearing within 30 days of the Final Notice of Intent to Levy. That process will suspend any levy or sale while the IRS reviews the case.
• Entering into an installment agreement or submitting an Offer in Compromise, both of which bar the IRS from levying while the review is pending.
• Paying the debt, thereby resolving the liability at a point in time that will stop any seizures.
• Claiming a levy was wrongful and requesting return of the property or proceeds, if the IRS failed to follow proper procedures, such as providing adequate notice, a 30-day levy notice or a sale notice.

Taking these steps will buy you time to prevent the IRS from seizing your assets. Ultimately, you’ll want to enter into a compromise or agreement with them. The goal is always to stop the seizures. A skilled tax attorney can clarify IRS procedures and taxpayer rights to help you figure out your best options.

Still Have Questions? Ready To Get Started?

For more information on IRS asset seizures in North Carolina and South Carolina, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (803) 771-9800 or (980) 677-1099 today.