When Can the IRS Take My House?

The Internal Revenue Service (IRS) can only seize your home under specific circumstances. If you owe the IRS money, they must send you a notice and give you the opportunity to pay what you owe them. They can’t just show up at your front door on the date after one missed payment and tell you to leave.

Although losing your house and becoming displaced is an overwhelming and scary thought, there might be options you can explore to prevent the IRS from taking your home from you. The IRS goes through the following process to seize a person’s house.  You can take steps to stop it.

Issue a Tax Levy for Back Taxes

tax levy for back taxesYou have tax debt if you owe money to the IRS. Typically, you receive a tax bill to pay the IRS next year for the money you didn’t pay for the previous year. Unpaid taxes are referred to as back taxes. If you continue to incur back taxes, the IRS can begin the process of collecting the money you owe.

One of the most common actions the IRS can take is using a tax levy. However, seizing your home with a tax levy is highly unlikely. You’re at a higher risk of losing your home due to the fallout of a tax levy than the actual tax levy itself.

For example, if the IRS uses a levy to take money from your paycheck, it could cause you to miss mortgage payments because you don’t have enough funds in your account. As a result, the mortgage company could decide to foreclose on your home.

Place a Lien on Your Home

The IRS can place a lien on your house. A federal tax lien is a claim against a person’s property to protect the IRS’s interests. Upon the sale of the property, the IRS can receive the money owed to them for the amount of the lien.

Typically, it’s easier for everyone when there’s a tax lien instead of a levy. The IRS can release the lien placed on your home once it has been sold as long as the tax debt can be compensated with the proceeds from the sale.

Paying back tax debt through the sale of a house isn’t the only way to remove your tax lien. You could potentially refinance your mortgage for the funds you need to pay back the debt you owe. There is a process the IRS goes through if you choose this option.

You must request that the IRS make the tax lien they place on your home the subordinate lien to your mortgage. If the IRS approves your request, you can use the additional money from your refinanced mortgage to pay the IRS the tax debt so they can release the lien.

Legal Process for Property Seizure

Before the IRS can attempt to seize your home, they must send you a tax bill. More specifically, a Notice of Demand for Payment is a letter informing you of the debt owed and setting out options for paying it back. You could arrange a payment plan to pay the IRS each month in installments until you pay back the full amount.

property seizureIf you don’t respond to the notice or choose not to make payment arrangements, the IRS can issue a Final Notice of Your Right to a Hearing or Final Notice of Intent to Levy. You will receive the final notice by certified or registered mail or delivery in person.

You can appeal the final notice if it includes information regarding your rights to an appeal. However, you must issue your appeal within 30 days from the date you receive the notice.

Or you can contact the IRS to request a payment plan. If you continue to ignore the IRS’s attempts to collect your tax debt, they can begin the process of seizing your house.

Contact Bradford Law Offices, PLLC

Bradford Law Offices, PLLC understands how stressful it can be when the IRS contacts you to collect a debt. You worry about what will happen if you can’t pay and whether you will be able to stay in your home. We have helped clients navigate the complex process of paying off tax debt for more than 20 years.

When you first meet with us, we will review the circumstances of your situation to determine your available options. You can count on our legal team to guide you through every step and work hard to try to reach the best outcome. You shouldn’t have to face this burden alone. We will remain by your side until the end.

If you owe back taxes and want to learn about your options to prevent the IRS from seizing your house, do not hesitate to contact Bradford Law Offices, PLLC. We are available 24/7 to speak with you when you need us the most. Call (919) 758-8879 today for a confidential consultation with one of our Raleigh tax debt resolution lawyers.