Asset seizure is that one thing many of my clients worry about, but few have had to experience first hand, thankfully. In my work as a tax attorney, I have noticed that the IRS does not like to use asset seizure as their “go to” collection tool. They will typically try everything else first, including letters, phone calls, field visits, liens, wage garnishments, and bank levies. However, after other efforts have been exhausted, if they are still unable to get the taxpayer to address their tax balance, the IRS has authority to seize any variety of assets, including vehicles, real property, and valuable personal property. These days property seizures are orchestrated by specially trained “PALS” employees (Property Appraisal and Liquidation Specialists) who coordinate with the revenue officer throughout each phase of the seizure and sale.
According to a recent report from the Treasury Inspector General for Tax Administration (TIGTA), the IRS needs to work out a few kinks in their asset seizure procedures. One of the problems that TIGTA identified occurs when a taxpayers’ personal property subsequently turns up inside or attached to the seized property. The IRS is supposed to use form 668-E to document these found items and they are to be released back to the taxpayer. But the form is not consistently used and the items are not consistently returned, according to TIGTA. Although, to be fair, the IRS audited 44 seizure cases around the country and the only item that TIGTA identified as being unreturned to the taxpayer was the license plate in six of the eight vehicle seizures (because in those six states the license is issued to the owner of the vehicle, not the vehicle itself). Kind of a non-issue if you ask me. Yes, its important to follow procedures, but I can’t imagine anyone wanting their license plate back to forever remind them of the car that the IRS took from them.
Another procedural problem is that there is no IRM guidance for how to handle removal of taxpayer data from installed equipment in vehicles. Two examples of this would be factory installed garage door openers and GPS units. If taxpayer is not permitted to retrieve the personal data or ensure that the device has been scrubbed, this poses potential privacy concerns where a third party purchaser would have access to the taxpayer’s home address and maybe even access to the garage.
Very few taxpayers would ever even consider these seemingly minor concerns, until you find yourself at the mercy of PALS and an overzealous revenue officer. Still, I think it is useful to ponder some of the minute details of what goes on inside the IRS, even if only to give us some perspective and understanding. I like to imagine my revenue officer tied up in a complex asset seizure when I don’t get a call back for a couple weeks. It makes me feel like they’re not just ignoring me, and it makes me feel better knowing that my client’s situation could be much worse.