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Will the IRS be interested in seizing your property?

We have noted in a number of our posts, the power the IRS has to collect taxes; especially those that are past due. The IRS may place liens on property, and even exercise levies on homes, cars and even financial accounts.  After all, the federal government believes that there are billions in uncollected tax debt that can be recovered; hence the use of private collectors on some accounts.

While the IRS collection power is quite extensive, it certainly has its limits. This post will provide some insight into what the IRS may, and may not be, interested in collecting. 

The IRS generally will exercise its enforcement powers on property that has sufficient equity to satisfy a particular debt. Essentially, a property has equity if its value exceeds the cost of such property. For example, a car that is worth $30,000, but is encumbered by an outstanding bank loan of $35,000, does not have equity, and is not likely to generate interest in seizure.

However, a home worth $520,000 secured by a $200,000 loan, would be more likely to generate interest because the IRS would definitely be interested in claiming a home that has more than $300,000 in equity. Similarly, bank accounts and investment accounts that harbor hidden income are particularly sought after.

Ultimately, the best way to avoid IRS collection actions is to proactively deal with a tax problem before it becomes an issue where the IRS employ its enforcement powers. If you have questions about how to avoid liens and levies, an experienced tax attorney can help. 

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Law Offices of Robert T. Leonard, APC

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