Will the IRS take my house?
One of the biggest concerns for taxpayers with large tax debt is will the IRS going to take my house. No matter what you may have heard, the IRS does not want your house, car, or furniture.
In 2018, the IRS made 275 seizures of real and personal property. Most of those seizures were of real estate. With greater than 14 million taxpayers with delinquent accounts in 2018, you can see the IRS’ seizure of hard assets are relatively rare. The IRS is not in the foreclosure business, nor do they want to put you out on the street.
Under 26 U.S. Code § 6331 and Internal Revenue Manual 5.10.1.2, IRS is prevented from seizing unless the seizure and sale will produce sufficient net proceeds from the sale to provide funds to apply to the taxpayer’s unpaid tax liabilities.
Even if there is equity in the home, a seizure requires the approval of a judge or magistrate of the District Court under IRC 6334(e)(1)(a) before being sent to an IRS property liquidation specialist. A property seizure is generally something the IRS does not desire to do. It is only done if you force their hand – meaning a lack of cooperation after repeated attempts by the IRS to work it out.
In 2018, the IRS levied 639,025 times. So, you can see the IRS is much more likely to levy wages or a bank account. Knowing this will allow you to understand how the IRS will pursue active collections.