How Often Does the IRS Seize Property?

The IRS uses a range of enforcement actions to collect back taxes, including seizing taxpayer assets. But how often does the IRS seize property? Not as often as you might think. 

During the 2023 fiscal year, the IRS seized property to satisfy tax debts 65 times. That’s down from 89 seizures for the 2022 fiscal year. That’s encouraging news if you’re worried about losing property for an unpaid tax debt, but it’s important to know how to address tax bills to avoid the risk of seizure.

Table of Contents

1. The IRS is threatening to seize property—could it really happen? 
2. How long does it take the IRS to seize property? 
3. What can the IRS seize for back taxes?
4. What bank accounts can the IRS not touch? 
5. How to stop an IRS asset seizure 

The IRS is threatening to seize property—could it really happen? 

The IRS can and does seize property to collect unpaid tax debts using levies. A levy allows the IRS to: 

• Garnish your wages
• Garnish your Social Security benefits
• Take money from your bank account or other financial accounts
• Seize and sell vehicles, real estate, or other property through a public auction

How do you know if you owe the IRS money and that a levy is on the way? Four conditions must typically be met before a levy can occur.

1. The IRS sends a Notice and Demand for payment for unpaid taxes.
2. You neglect (or refuse) to pay the tax due.
3. The IRS sends a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing at least 30 days before the levy. 
4. The IRS sends advance notice of Third Party Contact, which lets you know the government may contact third parties to determine or collect the taxes owed. 

The Final Notice of Intent to Levy may be delivered in person, left at your home or place of business, or sent to your last known address by certified or registered mail. 

Here’s more perspective on how often the IRS seizes assets: In 2023, 286,270 notices of levy were requested on third parties. This type of notice is used for wage garnishments and bank account levies. 

By comparison, just 65 property seizures were reported. So you’re more likely to see your wages or bank accounts garnished for back taxes than you are to have the IRS take your car or home. 

How long does it take the IRS to seize property? 

If you received a Final Notice of Intent to Levy, it means the IRS has checked all the boxes it needs to move forward with seizing your property. Once you receive this notice, you have 30 days to act to avoid the levy. 

A levy doesn’t automatically mean the IRS will go after physical property you own, but it leaves the door open for that to happen. The IRS may first start with your wages, bank accounts, and other assets. If that isn’t enough to satisfy the tax debt, it could put your vehicles, real estate, and other property on the chopping block.

What can the IRS seize for back taxes?

The IRS is authorized to seize a range of assets for back tax debts. Here’s what the IRS can and can’t lay claim to.

Can the IRS take…	Y/N
Wages, real estate commissions, and other income, including Social Security benefits?	Yes
Bank accounts?	Yes
Federal and state tax refunds?	Yes
Vehicles, including cars, RVs, ATVs, and boats?	Yes
Homes and rental property income?	Yes
Cash value portion of life insurance policies?	Yes
Business assets?	Yes
Certain personal items, including schoolbooks, clothing, furniture, household goods, and unopened mail?	No
Tools of the trade?	No
Unemployment and worker’s compensation benefits?	No
Child support payments?	No
Certain federal annuity and pension payments?	No
Certain public assistance benefits?	No

Can the IRS take your house and make you homeless?

Technically, the IRS could take your home and sell it at public auction to pay your unpaid tax debt. However, this is rare. The IRS usually only goes this far if it’s determined it has no other reasonable alternative for collecting what’s owed. 

If your home is seized, you can contact the IRS to request seizure release. The IRS is required to release a seizure if one of the following is true:

• You paid the tax due or set up an Installment Agreement to pay over time
• A seizure would result in financial hardship
• Releasing the seizure would help you pay your taxes
• The window for collecting the tax due ended before the seizure was issued
• Your home is worth more than the tax due, and releasing the seizure wouldn’t hinder the IRS’s ability to collect what’s owed

In short, if a seizure would leave you homeless and in dire financial straits, you can ask the IRS to change course. 

Can the IRS take your car?

The IRS can take your car or other vehicles you own to satisfy tax debts, even if you still owe on it. 

In that scenario, the lender that holds your car note takes priority for repayment. So the IRS could sell your car at auction and use the proceeds to pay off the loan, then keep whatever is left to apply to your tax debt. 

Can the IRS take your inheritance money?

Inheritances, including inherited property or money in your bank account, are not listed as exempt from levy in the Internal Revenue Code. That means if you inherit assets from someone else, they could be subject to seizure for taxes that you owe. 

Transferring inherited assets to an irrevocable trust may offer some protection against seizure. The downside is that once you put assets into this type of trust, you can’t get them back. 

Can the IRS seize jointly owned property?

Yes, the IRS can levy jointly owned property, including homes and bank accounts, even if only one spouse owes back taxes. Innocent spouse relief can help protect your share of assets if:

• You filed a joint return with your spouse
• Your tax bill is due to errors on your return
• You weren’t aware of the errors
• You live in a community property state

If you can’t check all those boxes, you may not be able to shield your part of joint assets from seizure.

Can the IRS seize your 401k?

Yes, the IRS can levy your 401(k), pension, and other retirement benefits for past-due taxes. That’s true whether you’re currently taking withdrawals in retirement or not. Similar to seizing homes, the IRS generally avoids levying 401(k) accounts unless there’s no other way to get you to pay the taxes owed. 

What bank accounts can the IRS not touch? 

The only bank accounts the IRS can’t levy for tax debts are ones that are not in your name. That being said, certain types of deposits into your account can’t be levied, including:

• Unemployment benefits
• Railroad Retirement benefits
• Certain military pension and annuity payments
• Worker’s compensation benefits
• Certain service-connected disability payments
• Certain public assistance benefits

If you receive any of these payments, the IRS can’t take them, but any other wages or income deposited to your bank account could be seized. 

How to stop an IRS asset seizure 

If you receive a levy notice from the IRS, it’s important to act right away. The 30-day clock on asset seizure is ticking. The IRS encourages anyone who receives a levy to reach out by calling the number listed on their notice. 

Your options for halting a levy include:

• Paying your tax bill in full
• Entering into a payment plan (Installment Agreement)
• Making an Offer In Compromise to settle your tax debt for less than what’s owed

Paying in full is the best way to stop asset seizures, but it may not be realistic if you have a large tax bill. An Installment Agreement gives you time to pay off your balance, but penalties and interest will accrue until the debt is paid in full. 

An Offer In Compromise could be a solution if you can pay something toward your tax debt. The only hitch is that the IRS doesn’t have to accept your offer if it believes it could collect the full amount due some other way. 

If you need help deciding what to do, talking to a tax relief company could help. 

Tip

Anthem Tax Services is a reputable company that earns the designation of best overall tax relief firm in our editorial ratings. It offers a range of services, including negotiating Installment Agreements, submitting Offers in Compromise, and appealing tax liens or levies. Its team of tax professionals, including enrolled agents and tax attorneys, works to find the best resolution for your situation. If you’re unsure of your options, Anthem Tax Services provides a free initial consultation to assess your case.

Having a professional on your side can make your situation feel less overwhelming. Review our list of the best tax relief companies to learn more about how this option works to decide whether it’s right for you.