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Can the IRS take my home if I owe back taxes?
June 24, 2020 Adam Gregory

Can the IRS take my home if I owe back taxes?

Posted in Real Estate, Uncategorized

There is a multitude of federal, state, and city governmental agencies, but one of the most powerful and feared of them all is the Internal Revenue Service (IRS).  Each year almost every citizen of the United States is required to report their income to the IRS. And each year, this allows the IRS to review, inspect, and audit what you reported.  With never-ending tax reporting rules, which change from year to year, many taxpayers make simple unintentional mistakes that trigger a declaration from the IRS that you did not pay the full amount due. Then, others intentionally under report their income or report the correct income, but due to financial hardship do not have the funds to pay the taxes they owe.  Regardless of the situation or what caused the underpayment of taxes, the IRS will vigorously pursue collection until the tax is paid.  And yes, in some instances, the IRS will take your home and sell it at public auction to the highest bidder and use the proceeds to pay your back taxes.

Although the IRS will use their extraordinary power to collect the back taxes, you owe, seizing and selling your home is not the first step in the process.  The process typically starts with a notice from the IRS informing you that you miscalculated the tax you owe or did not pay the amount due in full.  This is your first opportunity to correct the record (the IRS makes mistakes too) and resolve the issue.  Many times just providing them with additional documentation or explanation will solve the problem in your favor.  No matter the issue, even if you owe back taxes, do not ignore the letter or expect it just to go away.  It will not just go away, and the amount owed will continue to grow exponentially, and the collection tactics will become more aggressive over time.  The government does not forget or get tired of chasing you.

If for whatever reason, you find yourself on the wrong side of the IRS and they are initiating collection procedures, it is important to know what they can and cannot seize from you.  The basic rule is that the IRS can seize any asset that you do not need for your basic survival and shelter. This includes cars, boats, recreational vehicles, jewelry, bonds, stock, savings accounts, life insurance policies, retirement accounts, and all other assets that are not critical to your basic needs.  They can also garnish your wages, social security benefits, and other forms of income. The IRS uses these extraordinary steps to collect on back taxes when taxpayers have failed after repeated warnings to pay what they owe or fail to cooperate by entering into a reasonable payment plan.

If all other efforts fail, the IRS will use their power of property seizure and sale, but this is rare and reserved for the worst offenders. This includes:form 1040

  • Individuals who intentionally try to hide income or assets.
  • Individuals who withheld taxes from employees but did not remit the funds to the IRS. (They took the funds from the employee but kept it for themselves.)
  • Individuals who intentionally committed tax fraud.
  • Individuals who refuse to reply or cooperate with the IRS.

 

The best way to avoid these problems is to pay the taxes you owe on time. If you are experiencing financial hardship and cannot pay the taxes, you owe you need to communicate with the IRS and be completely open and honest about your financial situation.  The IRS has numerous programs to assist the taxpayer, including taxpayer forgiveness. Still, it would help if you worked with the IRS to find a mutually acceptable resolution to pay the taxes that are owed.

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If you owe the IRS back taxes and need immediate cash, a quick cash home buyer can be a great source of help in resolving the problem by getting you the money you need quickly and with the least amount of hassle.

In summary, communicate with the IRS before they take aggressive action, and if you need fast cash, OutFactors will buy your home for all cash, which you can use to pay the IRS what you owe and get a fresh start.

This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax, legal, or accounting advice. You should consult your tax, legal, and accounting advisors.

 

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