An IRS seizure of property is the physical taking and sale of assets such as a vehicle, business equipment or real estate to pay a tax debt. It is rare and comes only after several required notices. Your primary residence has added protection: the IRS generally needs a federal court's approval before seizing it. There are also ways to stop a seizure or get property released.
If a revenue officer has mentioned seizure or you have received a final notice, call (415) 754-0115 to schedule a free consultation right away, or use our contact page. The earlier an attorney steps in, the more options remain.
The notices required before any seizure
The IRS cannot seize property without warning. The law builds in a series of steps, and missing one of them can be grounds to challenge the action.
- Assessment and notice and demand. The tax is assessed and you receive a bill demanding payment.
- Failure to pay. The balance remains unpaid after the demand.
- Final notice of intent to levy. The IRS generally must send a notice such as Letter 1058 or LT11, with your right to a collection due process hearing, at least 30 days before levying or seizing.
A timely hearing request in response to that final notice generally stops levy action, including seizures, while Appeals reviews the case.
Seizures are usually handled by a revenue officer
Physical seizures are carried out by field revenue officers, typically after other collection tools have not worked. Before seizing, the officer is expected to verify the taxpayer's interest in the property and consider whether its sale would actually produce money after liens and costs. If a sale would not generate meaningful proceeds, the seizure generally should not happen.
Special protections for a principal residence
Your home receives the strongest protection the tax code offers.
Court approval is required
Under section 6334(e) of the Internal Revenue Code, the IRS generally may not seize a principal residence without written approval from a federal district court judge or magistrate. The IRS must file a petition, and you receive notice and an opportunity to respond. The IRS must also show that it has considered other ways to collect.
Small balances and residences
The law also bars seizing real property used as a residence when the amount owed is small. These limits help explain why home seizures are uncommon, particularly when the owner is actively working with the IRS.
What about rental and vacation property?
Second homes, rentals and investment real estate do not get the court-approval protection, which makes them more realistic seizure targets. Business assets of an individual also get some added review; the IRS is expected to look at other assets first.
Property the IRS cannot take
Section 6334 lists property that is exempt from levy. It includes certain wearing apparel and school books, some household items and tools of a trade up to limits adjusted for inflation, unemployment and workers' compensation benefits, certain public assistance, and a minimum portion of wages. Court-ordered child support can also be protected. An attorney can check which exemptions apply to your situation.
How to stop or reverse an IRS seizure of property
Depending on timing, several paths may be available.
Before the seizure
- Request a collection due process hearing within the 30-day window.
- Propose an installment agreement or offer in compromise, which generally limits levy action while pending.
- Ask a revenue officer's manager to review the proposed action, and use the Collection Appeals Program if you disagree.
- Show economic hardship, which can support currently not collectible status.
After the seizure but before the sale
You can typically redeem the property by paying the tax, penalties, interest and the IRS's expenses. You can also ask for release under section 6343, which lists grounds such as full payment, an expired collection statute, an installment agreement that calls for release, economic hardship, or when the property's value exceeds the liability and releasing part of it will not hinder collection. The IRS must send a notice of seizure and public notice of sale before any auction.
After a sale
Real estate sold at an IRS sale can generally be redeemed within 180 days by paying the purchaser the price plus interest. Personal property usually has no redemption right after sale.
A bankruptcy filing also triggers the automatic stay, which generally halts seizures and sales while the case is pending. Whether that fits depends on your broader finances, including other debts, the equity in your property and whether the taxes involved are old enough to be treated differently in bankruptcy. An attorney can walk through that comparison with you.
Legal help from the Somal Law Firm
Attorney Bob Somal handles IRS disputes and collection appeals through the firm's tax law practice, alongside bankruptcy and foreclosure defense. For homeowners in Pleasanton, Dublin, Livermore, San Ramon, Danville and elsewhere in the East Bay, that means one attorney can weigh tax options and bankruptcy together. If a lien is also on your property, our article on removing an IRS tax lien covers withdrawal, discharge and subordination, and our guide to releasing an IRS bank levy covers account levies.
For a first meeting, bring every IRS letter you have received, any notice of seizure or sale, a list of your assets and recent bank statements. Those documents show where the case is in the process and which protections still apply.
Frequently asked questions
Will the IRS take my car?
It can, but vehicle seizures are uncommon and usually follow years of unanswered notices. Vehicles needed for work can support a hardship argument.
Can the IRS seize my retirement account?
Retirement accounts can be levied, but IRS procedures call for extra review, including whether the conduct was flagrant and whether other assets are available.
What if the seized property belongs to someone else?
A third party whose property was wrongfully taken can file a claim for return of the property and may have a right to sue within the time limits.
A seizure threat is serious, but it is rarely the end of the road. Call (415) 754-0115 to schedule a free consultation with the Somal Law Firm, or reach us through the contact page. We will review the notices you have received, confirm your deadlines and explain the ways to protect your property.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.