What Property is Exempt from IRS Seizure?

IRS Seizures – What They Can’t Take

The IRS can seize many different types of property, including bank accounts, wages, and retirement accounts. However, some items are specifically exempt from IRS seizure under federal law.trust fund tax penalties

The following types of property can’t be seized by the IRS under any circumstances:

  • unemployment benefits
  • certain annuity and pension benefits
  • certain military service-connected disability payments
  • workers’ compensation benefits
  • certain public assistance payments
  • income for court-ordered child support payments
  • necessary schoolbooks and clothing
  • certain amounts worth of fuel, provisions, furniture, personal effects for a household
  • certain amounts worth of books and tools for trade, business, or professions

In addition to these payments and assets, a portion of your wages from each paycheck is exempt from seizure. The exempt amount is calculated based on your filing status and number of dependents. Your wages above this amount can be seized continuously until your tax debt is paid off.

Another important limitation on IRS seizures is that they need to result in net proceeds to the Treasury. If you have an underwater mortgage, the IRS won’t benefit from seizing your home because all the sales proceeds will go to your mortgage lender or lenders.

Assets Subject to Seizure

The IRS commonly attempts to levy bank account funds or wages. If these aren’t available, your retirement accounts and primary residence are fair game, but these seizures are much less common.

Typically, the IRS only pursues retirement account or home seizures when the taxpayer has committed flagrant misconduct and there’s no other option available. Even in these cases, you can often avoid a seizure if you start cooperating and work out a payment arrangement.

Federal payments—including Social Security retirement benefits, some federal salaries, and military retirement benefits—are subject to seizure. The IRS can take 15% of every payment until your balance is paid

What If You Have No Seizable Assets?

If you have no assets or wages that can be seized, the IRS can continue to send you notices demanding payment of your tax debt. They can also continue to monitor your situation to see if you acquire any seizable assets.

You may be a candidate for an Offer in Compromise if this is your situation. Consult a tax attorney to determine how to get the IRS off your back.

Contact a tax attorney

Ayar Law provides creative solutions to your tax problems, including Offers in Compromise and audit defense. Call us at 248-262-3400 to schedule a consultation with one of our tax attorneys

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.