When you owe back taxes to the Internal Revenue Service (IRS) and the agency has already sent you a bill, it can take other actions to collect the debt it is owed. One of those actions is claiming property or seizing your assets. Can the IRS take your house? In some cases, yes, the IRS can take your house.
However, the agency has to notify you and may require court approval before taking your home. It’s important that you understand your rights in the face of IRS tax liens and property levies.
What Is a Lien on Your Property?
When the IRS places a lien on your property, that is the agency claiming that property. It is done in response to a tax debt. The lien claims property as collateral to the debt, meaning the agency can seize it if you continue to not pay the tax debt or address the issue.
It can be unfortunately easy to end up behind on your taxes, which can lead to penalties. If you don’t address these penalties or your principal debt, it can become unmanageable. The IRS assessed over $84 billion in civil penalties against taxpayers in 2024.
A lien is one of several collection actions the IRS might take if it has sent you tax bills and you have ignored your liability and the agency’s attempts to contact you. In 2024, the IRS filed nearly 197,000 federal tax liens. A tax lien could be placed on:
- Your home
- Your vehicle
- Other real property
- Commercial real estate
When the IRS places a lien on your property, this can be seen by creditors. The lien can affect several aspects of your life, including making it hard to secure credit and preventing you from refinancing the assets. While receiving notice of a lien on your property does not immediately mean it will be seized, the IRS could eventually claim the asset to pay off your debt.
How Does the IRS Seize Property?
A lien itself does not result in the seizure of property. It is simply the claim the IRS has on the property as collateral. If the IRS does decide to take the property, this is the seizure of the property, or a levy. There are certain steps the IRS has to take before it can levy your property. Generally, the following has to occur before a levy:
- Tax bill: The IRS assesses the tax you owe and sends you a Notice and Demand for Payment.
- Failure to respond: This occurs whether you don’t pay the tax owed, refuse to pay, or don’t respond.
- Notice of levy: The IRS will send you a Final Notice of Intent to Levy. It will also send a Notice of Your Right to a Hearing. These notices are sent 30 days before the levy is enacted. The IRS will also send a notice for Third Party Contact if it has to contact an employer, bank, or other party in order to conduct the seizure.
In rare cases, the 30-day window does not apply. If the IRS is seizing property that is your primary home, then it has to get court approval to do so.
Tax Deed Sales
When there is a lien on your property and the IRS decides to seize it to cover your debt, then it can do so through a tax deed sale. The IRS sells a tax certificate for your property at an IRS auction to the highest bidder. The funds from the sale go to cover your tax liability. After a certain amount of time, the owner of the tax certificate can file to get ownership of the property the certificate is for.
What Can You Do to Resolve Your Tax Debt and Protect Your Home?
The most effective way to protect your home from an IRS lien, levy, and asset seizure is to pay off the debt you owe in full.
However, if this isn’t a financial possibility, there are other options. You should never ignore the IRS and hope the problem goes away, as this will likely only grow your debt and the financial consequences. You should instead try to negotiate the debt with the IRS. The IRS is open to working with taxpayers who are trying to pay their obligations. In 2024, the IRS helped over 62 million taxpayers. There are several options for negotiating a tax debt you can’t pay, including:
- Payment plan: The IRS offers payment plans, called an installment agreement, which lets you pay your entire debt at a set monthly amount.
- Disputing the lien: If you believe the lien placement was an error, then you can dispute it.
- Penalty abatement: Certain penalties can be cleared from your tax debt because of reasonable cause or through first-time abatement. This abatement also clears the interests associated with the penalty. This can often greatly reduce the total debt you owe.
- Currently not collectible: If you are unable to pay because of temporary financial hardship, you can file for Currently Not Collectible status, which can pause collection actions like levies.
- Offer in compromise: You could settle your entire tax debt for a lower amount if you qualify and are approved for an offer in compromise.
The support of a Miami State Tax attorney helps you assess these and other options based on your unique financial circumstances.
FAQs About The IRS Property Seizure Laws
How Do I Protect My House From the IRS?
The most effective way to protect your house from the IRS is to pay the debt you owe the agency, or get in contact with the agency to discuss debt settlement options. Debt settlement is possible if you do not have the financial ability to pay the debt you owe without putting yourself in financial hardship. If you ignore the debt, the IRS can take collection action to recover it, and one of those is levying your property.
How Long Does It Take the IRS to Seize Your Property?
Once the IRS sends you a Final Notice of Intent to Levy, you have at least 30 days from when the notice was sent before your property is seized. When there is an existing lien on your property, this does not lead to immediate seizure, although the IRS could decide to levy the property. There may be delays if the IRS needs court approval.
What Assets Cannot Be Seized by the IRS?
There are specific assets the IRS cannot seize to cover tax debt, including a set portion of your income and specific personal items like clothing, some furniture, necessary school books, and other household items. The IRS also needs court approval to seize your primary home, and also prove to the court that there is no alternate way to cover the debt it is owed. When you hire a tax attorney, they can assess what assets are protected.
Can the IRS Take Your House if You Own It?
Yes, the IRS can take your house if you own it, although only if the requirements are met when it is your primary home. This includes if you owe the IRS a debt, have made no effort to resolve it, the IRS cannot recover the debt another way, and the court approves the seizure of the home. Because of these restrictions, it is rare that the IRS uses a property levy to seize your home, but it can happen.
Hire a Tax Attorney at TaxSmith, LLC
Facing a tax lien or levy can be terrifying and cause you serious financial instability. If the IRS is taking collection actions for your tax debt, you need to act immediately. At TaxSmith, LLC, we have more than a decade of experience in tax laws. Contact our firm today.
