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What Property Is Exempt from IRS Liens and Levies?

Posted by Brandon Keim | May 19, 2023 | 0 Comments

If you owe any outstanding tax debts to the Internal Revenue Service (IRS), you might wonder how bad this could get if the IRS chose to seize your property. The broad rule is that the IRS can take all property and rights to property from the taxpayer to satisfy the debt owed. However, there are some limits to what the IRS can—and cannot—seize.

Baseline Living Needs

While the IRS can seize salaries, bank accounts, and homes, the IRS doesn't take everything. The IRS will allow someone to have a minimum amount of income (determined by statute). The IRS will also exempt salary that is designated as child support. 

A taxpayer can keep necessary personal property, including furniture, apparel, fuel, food, clothes, school books, and other personal items.

When it comes to a taxpayer's residence, the IRS won't levy real property that the taxpayer uses as a residence if they owe less than $5,000. For those who owe more than $5,000, it is possible that the IRS can take their home, but the IRS can't evict someone from their principal residence on its own. Instead, the IRS must first obtain approval from a judge or magistrate after proving that a debt is owed and that the sale of the home is the only way to recoup the funds. 

Property Relating to the Debtor's Earning a Living

When levying property to pay for a debt, it may feel like you're being punished, but that isn't actually the IRS's goal. The agency's goal is to collect the amount owed. And the IRS would prefer that someone pay their debts than force the IRS to sell their property. That's why the IRS won't seize the taxpayer's tools of the trade—items that the taxpayer needs to earn their living—because the IRS doesn't want to slow down their ability to pay off their tax amount.

Types of Benefits

Relatedly, the IRS exempts categories of benefit payments from levy. These include:

  • unemployment benefits
  • workers' compensation payments
  • certain veteran benefits or service-connected disability payments
  • other types of retirement pensions
  • certain payments relating to public assistance or participation in a jobs training program

But for those dealing with a levy, it would be little comfort to find out that IRS seized property that it wasn't supposed to take. Instead, the best strategy is to work out a way to resolve the debt before the IRS can take your property.

That's why if you have any concerns relating to tax issues, don't wait. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.


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