If you don't make the necessary arrangements, the IRS can start taking your assets after 30 days. This is called the hazard rate. If the IRS confiscates your home or other property, it will sell your share in the property and allocate the proceeds (after the costs of the sale) to your tax debt. Before you sell your property, the IRS will calculate a minimum offer price.
The IRS will also provide you with a copy of the calculation and will give you an opportunity to challenge the determination of fair market value. The IRS will then deliver the sales notice to you and announce the pending sale to the public, usually through local newspapers or flyers placed in public places. After giving the public notice, the IRS will generally wait at least 10 days before selling your property. The money from the sale pays for the cost of seizing and selling the property and, ultimately, your tax debt.
If there is money left over from the sale after you settle your tax debt, the IRS will tell you how to get a refund. If you don't appeal or make the arrangements within 30 days, the IRS can legally seize your property. The IRS physically keeps your property. The IRS then provides you and the public with a notice of sale.
Ten days later, the IRS sells the property, usually at auction. Notice must be given at least 30 days before any seizure occurs (except in rare circumstances). If you can show the IRS that you are struggling financially to cover your current expenses along with your income and assets, you may be declared uncollectible. However, with an employer plan, the IRS can only get it if it's guaranteed, that is, if you have an immediate right to receive benefits.
When it comes to less tangible assets, the IRS can and will withdraw money from your savings and retirement accounts. While the IRS may already know your local real estate properties by searching public records, it may not know about properties in other states or that they may be in the name of an entity or other person. The IRS could confiscate the lot and sell it to pay Rudoph's taxes, ignoring Wilma's property because she didn't pay a fair price. After three days, your employer or the company that owed you money as an independent contractor must pay the IRS any non-exempt money owed to you.
This does not give the IRS the right to collect, because it does not contain a notice of your right to appeal this action by the IRS. The IRS also realizes that if the revenues from the auction do not cover the entire tax bill, the chances of collecting the balance are significantly reduced if the business closes. The IRS cannot keep the house you live in or the car that is your main means of transportation. The IRS records a federal tax lien notice with the county recorder's office, even though Joyce doesn't own real estate.
Below is a flow chart from the Internal Revenue Manual that tells IRS staff when to file a federal tax lien notification. The IRS can also publish the seizure if it determines that the seizure is causing immediate economic hardship. Finally, if the IRS lost a payment, confiscated property by mistake, or made a processing error in an installment agreement with direct debit, you can request a refund of bank fees. In that case, you'll pay taxes when they're collected by the IRS, but you won't have to pay the normal 10% early withdrawal penalty if you're under 59. It's perfectly legal not to provide information to the IRS or ask to speak to a tax professional before answering any questions.