Properties that are exempt from Seizure after and IRS Audit

The tax laws are quite complex, and the section of the Taxpayers Bill of Rights exempting certain properties from IRS seizure is no exception. If you have questions after reading this article or other research, contact a tax professional.

The weekly amount of wages that are exempt from IRS seizure are those that is equal to your standard tax deduction plus allowable personal tax exemptions divided by 52. The amount of exemptions varies from one type to another. For example, the amount of personal property exempt from IRS seizure is $6,250.00 for fuel provisions, furniture and household items. The amount of tools, books, machinery or equipment used in a business or profession that can be exempt is $3,125.00. Non-exempt business property may not be seized unless an IRS district or IRS Assistant Director determines that the taxpayers' other assets are insufficient to cover the tax liability or that the collection of the tax is high risk.

A personal residence is exempt from IRS seizure if the unpaid amounts is less than or equal to $5,000. When the tax liability amount exceeds the $5,000 rule, the IRS must obtain written approval from the U.S. District Court Judge to seize the taxpayer’s personal property. The IRS must then give a (30) day written notice of intent on seizing the property in order to give the taxpayer a chance to contest the tax levy if it is erroneous. During the waiting period, however, the IRS may freeze the taxpayers assets.

The tax notice must meet certain criteria including a clear description of the tax levy procedures, the options of avoiding the tax levy such as installment payments of overdue tax, and steps for redeeming your property in the event that the IRS seizes it. The bank will hold your account for (21) days after receiving notice of an IRS tax levy before releasing the money to the IRS. This freeze allows you the time needed to contact the IRS. If the IRS attempts to tax levy your property and you have already paid the overdue tax bill, if the statute of limitations has expired, or if the property is exempt under the bankruptcy rules, then you should file an appeal with the IRS to release the tax levy. Make sure that you send a written statement to the IRS district director in the district where you live and the lien was filed, informing the director of the grounds of the appeal.