December 8, 2016

ProtectingAre you behind on paying your taxes? Taxpayers who are unable to pay their taxes can expect to receive a series of notices in the mail, accompanied by a detailed set of instructions outlining their taxpayer rights. Exemption issues can generally be resolved easily, but taxpayers with large balances on their returns can eventually face the possibility of having a levy or lien placed on some or all of their properties if they refuse to communicate with the IRS.

The Internal Revenue Service has the authority to seize most your assets, but the good news is they cannot take absolutely everything away from you. Some assets are protected by IRS policy considerations, while others assets are exempted by law.

Among the assets that are off limits to the IRS include:

  • Basic clothing items and schoolbooks that are vital to the taxpayer and/or the taxpayer’s family
  • Personal items amounting to $7,700 This may include furniture, provisions, fuel, and personal effects. If you are a farmer, this may also include livestock.
  • Educational, professional, or trade textbooks and equipment amounting to $3,860
  • 85% of unemployment benefits
  • Workers’ compensation
  • Social Security, welfare, and most public assistance payments
  • Court-ordered child support
  • Minimum exemption amount for income such as wages and salary to pay for basic living expenses
  • Railroad Retirement Act and Congressional Medal of Honor benefits.
  • Assistance under federal job training partnerships
  • Specific service-connected disability payments
  • Undelivered mail

Vehicles are not partially or fully exempt from levy, as they are not typically classified under “tools of the trade” or “personal effects”. You may, however, be able to persuade an IRS collector that it should not be levied as it is essential for you to get to work and earn money to pay off your tax debt.

Simply put, the IRS can seize anything and everything that is not mentioned in the list above. Note though, that IRS policies discourage IRS collectors from seizing specific items—such as retirement plans and retirement homes. These items should only be seized as a last resort.

When it comes to collecting due taxes, another option the IRS has is to garnish a portion of a taxpayer’s wages. The taxpayer must still have enough wages remaining to live on from every paycheck. Individuals with many dependents or who have low incomes may be exempt from wage garnishment. Once a levy is implemented, it will remain in effect until all overdue taxes are paid in full.

 The IRS has a substantial amount of power with regards to issuing liens and levies, as they are typically very effective methods of collecting taxes. However, taxpayers must be aware that they too have rights during such proceedings and that there are numerous strategies that may be used to delay or prevent the IRS from seizing both personal and business assets. It would be best, therefore, to consult with a knowledgeable and experienced tax attorney.


Categories: IRS, Tax Levies, Tax Tips, Taxpayers' Rights, Uncategorized