The IRS has the right to take your “right, title and interest”. This means if you own it, they can seize it. But keep in mind that the IRS will seize what you own as the last resort. And only if there is equity in what you own.
For example, if you are making payments on a $13,000 car and still owe $10,000, the IRS is less likely to take your vehicle. After they auction off the car, and pay off the lien holder, the IRS gets to keep the equity, but if there is no equity, then it really isn’t worth it to them. However, if you have a paid off $20,000 car, they will seize your vehicle.
Generally speaking, the IRS hesitates to take property or assets from a tax payer unless there is about 20% equity that they can receive from the sale of your item. And that is after they reduce the price of your asset by 20% of the fair market value. For example, the $20,000 car they seized is actually only worth $16,000.
In 1988, the Taxpayer Bill of Rights was passed by Congress, allowing for you, the taxpayer, to have more rights in regards to what the IRS can seize and the process in which it was seized in. The IRS will not just show up at your home or place of business to seize your car. They have to; by law give you at least a 30 days’ notice of the intent. You also have the right to representation by an attorney or CPA, and have the right to appeal any decision made by the IRS.
Grasping your assets, like your car or home, is the last resort of the IRS. They want to work out any back tax issues just as much as you do. They understand the destitution seizing your vehicle may be on your day to day life. There is code that prevents the IRS from creating an economic hardship. It is highly important to respond to correspondence received by the IRS, or take it to your representative to have them respond for you.
If you find yourself in a situation where your car can be levied, please call us today so that we may assist you in keeping all of your assets and settle with the IRS.