Even if the IRS has identified a “won’t pay” situation, there are a number of steps and procedures that must be followed in order to legally and successfully carry out an IRS seizure. Here are some of the pre-seizure considerations:

1. Verification of the liability. This includes notifying the taxpayer of the liability and making sure he/she understands why the amount is owed.
2. Consideration of alternative collection methods. Alternative collection methods include Installment Agreement, Offer in Compromise, Levy, etc. Technically the IRS does not need to attempt these methods, just consider them. However, it is standard practice to actually test them out to see if the liability can be satisfied first without resorting to seizure.
3. Cost / Benefit analysis. The seizure process is an administrative nightmare; the revenue officer must consider the red tape, time investment, and costs of seizure to see if seizure is really in the government’s best interest.
4. Prohibited seizures. There are a number of scenarios in which the Revenue Code prohibits seizure, such as a seizure conducted on the day the taxpayer has to appear in response to a summons, or seizure of property with insufficient equity to apply to the back tax liability.

Our tax relief clients often ask us if they should be worried about the IRS taking their home or other valuable assets.  We have to be careful about the way we answer this question because the IRS certainly has the power and authority to seize assets; they do it all the time.  However, we can often predict the likelihood of seizure based on the taxpayer’s individual circumstances.

For instance, seizures will generally not be conducted where taxpayers “will pay” or “can’t pay.”  The “will pay” situation is typically one in which the taxpayer is making preparations to pay, either by selling assets, obtaining a loan, or negotiating an installment agreement with the IRS.  If the taxpayer is “Currently Not Collectible” or is in the Offer in Compromise process, then these are considered “can’t pay” situations.

On the other hand, seizures will be considered where taxpayers “won’t pay.”  This is the category of taxpayers who repeatedly refuse to file tax returns and who keep piling up tax balances year after year.  It also includes those who rely on frivolous tax arguments or who refuse to cooperate with the IRS.  IRM 5.10.1.6.