TIGTA Reviews IRS Asset Seizure Procedures

Posted by Wetenkamp on with 0 Comment

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.

Will the IRS Take Your Home?

Posted by Wetenkamp on with 0 Comment

The likelihood of the IRS resorting to collection of taxes through asset seizure — probably the most severe tax collection method — can only accurately be determined on a case-by-case basis*.  Certainly the IRS has authority to seize and sell assets in order to satisfy a tax debt, but it has to make sense for the Service to do so.  They want to be sure that the target asset (or assets) will raise enough money to cover all or most of what is owed.  They want to be sure that the profits from the seizure and sale will at least match the effort and preparation going into the procedure.

Furthermore, the IRS has internal guidelines dictating when and how they may proceed with asset seizures.  In other words, the IRS doesn’t normally go after granny’s little two bedroom farm house, but there are exceptions.  The IRS doesn’t like to boot people out of their primary residence; it’s not good public policy and not a great PR move.  And the IRS doesn’t normally resort to seizure at all if they can collect what is owed through other means.  Much more common is the wage garnishment, bank levy, and federal tax lien.  Of course the preferred method of tax collection is through voluntary payment, but not everybody pays their taxes so willingly.

But don’t be mistaken, the IRS can and will seize assets, primarily real property, vehicles, and valuable estate assets.  Local news outlets often advertise public auction dates.  The IRS also posts details about asset sales on their dedicated IRS auction website.  If you do attend an IRS auction, you should know that they don’t accept personal checks, and they don’t take American Express.

*You might argue that the most severe IRS collection tool is criminal prosecution and prison sentences; however, I don’t know if I would consider this a collection method, except to the extent that it encourages others to file and pay on time.

May be Too Late to Score Some Young Buck Swag

Posted by Wetenkamp on
image via realtalkny.uproxx.com

If you are following the news stories concerning the financial woes of Rapper Young Buck, you probably know that his IRS situation has escalated to the point that his property is being sold at auction . . . right now.  The auction was to begin today at 10:00am in Nashville.

When a tax debt is not immediately paid, the IRS moves pretty quickly through its arsenal of ordinary collection tools like the wage garnishment and bank levy.  But when it comes to seizure and sale of personal property, the IRS wants to be absolutely sure it has tried every other less-intrusive alternative.  So in the case of Young Buck, and any other property seizure case, we can be fairly certain that the IRS has already tried, perhaps over the course of months or years, to collect what is owed “the nice way.”

The IRS provided a list of everything being sold at today’s auction and even pictures of most of the stuff.  It might be fun to take a look because I can assure you that all your stereotypes and assumptions about what might be sold at an IRS / rap star auction will be . . . well . . . confirmed.