“Wherever we can, we follow the law.” This is the response that IRS Commissioner John Koskinen recently gave when he was questioned by Congress regarding whether the IRS would require ineligible people who received subsidies under Obamacare to pay them back.
This is not the type of response one would expect or hope to hear from an IRS Commissioner. The response does not exactly instill public confidence in the IRS’s ability to perform its job duties. In fact, it is not uncommon for the IRS to fail to properly abide by the laws that it is entrusted to enforce. One example is the IRS’s attempts to seize taxpayer property for back taxes.
IRS Seizure Guidelines
A seizure is the process by which the IRS takes a taxpayer’s property for unpaid taxes. The IRS does this through a levy. A levy provides the IRS with the legal authority to take property to satisfy a debt. A levy is a tool that permits the IRS “to collect on balance-due accounts that are not being voluntarily paid.”
The Internal Revenue Code provides specific guidelines that the IRS must follow when conducting seizures. Some of these procedures include the following:
- The IRS must provide the taxpayer with notice that the individual is entitled to a hearing prior to seizure action.
- The notice must provide the amount owed, the taxpayer’s right to request a hearing during a 30-day calendar period, and the potential action by the IRS.
- The IRS may seize property after sending the 30-day notice, but is prohibited from seizing property 1) during a pending suit for the refund of any payment of a divisible tax, 2) before a thorough investigation of the status of any property subject to seizure, or 3) while either an offer in compromise or an installment agreement is being evaluated.
- For property that the IRS seizes and attempts to sell, the taxpayer must be given notice of the sale and must be provided an opportunity to redeem the property.
Illegal Seizures by the IRS
In June 2013, the Department of Treasury published a report containing the results from the Department’s review “to determine whether seizures conducted by the [IRS] complied with legal provisions set forth in Internal Revenue Code.” The results were not encouraging.
The report found that 30% of the time the IRS failed to comply with the law when the IRS seized taxpayer property. The failures of the IRS when conducting seizures included:
- Taxpayers were not properly advised of sales of seized properties;
- Notices of the seizure did not contain the correct liability balance;
- Balance-due letters were not correctly updated to reflect the actual amount owed; and
- Expenses and proceeds from seizures were not properly applied to balances owed.
Contact a California Tax Attorney
If you have any questions regarding IRS seizures and levies, our experienced tax attorneys can help you. We can advise you on how to approach tax audits, liens and bank levies to protect your assets. Our firm is based in San Diego, California. Contact us today for a free case consultation.