The IRS may use seizures as a last resort to collect large amounts of back taxes that a person may have owed for many years. Usually the amount of the taxes owed is a lot smaller than the total amount owed. This is because penalties and interest are applied to any unpaid balances each year, and this additional amount can accrue quickly. The penalties are compounded every year, which can make the amount owed very large. Seizures are an extreme measure for the IRS to take to collect back its money, but it can happen.

If the IRS does seize a person’s possessions, they can do so without taking that person to court or getting a judgment from a court. Because of this, seizures are a very powerful tool in the collection of taxes and one that taxpayers will do anything to avoid. In a seizure, the IRS is allowed to take just about everything a person owns. They will then sell the possessions to redeem the money owed from the taxpayer.

Some of the possessions the IRS may confiscate include all bank accounts, all earnings, any federal pensions, any Social Security benefits, the liquidity of any life insurance, personal real estate owned, assets that have been transferred to family or friends (which will be sold at fair market value), goods such as vehicles or furniture, and any business property or real estate.

When seizing homes and businesses, the District Director of the IRS can simply sign a form and the taxpayer is suddenly without a home or business. An exception to this is that if the amount owed is $5,000 or less, the IRS cannot take the person’s home. With regards to seizing a business, the IRS does not have to follow any certain procedures. The IRS has to first gain the owner’s permission to enter the business to shut it down. But, if the person refuses to allow permission, the IRS can simply apply for a court order to execute the seizure.

There are things a person can do to stop the IRS from taking their property. One is to appeal for a due process hearing. Here, the person may question the validity of the seizures or the amount of taxes that are due. In this case, the taxpayer may ask for an Offer in Compromise. If nothing else, the person will be able to gain some extra time to pay off the taxes owed.