How to Stop the IRS from Seizing Your Property: Protect What’s Yours!

The IRS takes aggressive action against unpaid taxes, issuing hundreds of thousands of levies and seizing assets annually. According to the IRS Data Book, the agency collected over $4.7 trillion in taxes in the most recent fiscal year and processed nearly 271.5 million tax returns. When tax debts remain unresolved, the IRS can seize homes, bank accounts, wages, and business assets to satisfy outstanding liabilities.

The good news is that you have options to stop, delay, or even reverse an IRS seizure, but taking action quickly is critical. In this guide, we will break down how to prevent the IRS property seizure, the legal defenses available, and the strategies that a tax attorney can use to protect what is rightfully yours. The IRS follows strict procedures, and knowing your rights can make all the difference in keeping your assets safe.

Understanding IRS Property Seizure

The IRS has powerful enforcement tools at its disposal, and property seizure is one of its most aggressive collection actions. Unlike a tax lien, which is simply a legal claim against your property, a seizure means the IRS can physically take ownership of your assets and sell them to recover unpaid taxes. This is a last-resort action, but it happens more often than most taxpayers realize.

When Does the IRS Seize Property?

The IRS does not seize property without warning. The agency follows a structured enforcement process, giving taxpayers multiple opportunities to resolve their debt before taking drastic action. Here’s how the process typically unfolds:

 Sending Notices of Unpaid Taxes

The IRS initiates the collection process by sending a series of notices to inform taxpayers of their outstanding debt. These notices escalate in urgency:

• CP14 Notice: The first notification that a taxpayer owes unpaid taxes. It outlines the amount due and provides a deadline for payment.

• CP501 Notice: A follow-up reminder that the debt remains unpaid, urging immediate action to avoid further consequences.

• CP503 Notice: A second reminder, often with stronger language, signaling that the IRS is increasing its collection efforts.

• CP504 Notice: A final warning before serious enforcement actions begin. This notice states that the IRS may levy income sources or seize property if the debt is not resolved promptly.

At this stage, taxpayers still have the opportunity to enter into a payment arrangement or dispute the debt if they believe it is incorrect. Have you received a notice of seizure? Call us at (888) 342-9436 immediately to stop the IRS from taking your property!

Issuing a Final Notice of Intent to Levy

If the taxpayer does not respond to earlier notices, the IRS escalates the process by sending a Final Notice of Intent to Levy (Letter 1058 or LT11). This document is an official warning that the IRS intends to seize property if the debt remains unpaid. Taxpayers have 30 days from the date of this notice to take action. Ignoring this notice allows the IRS to proceed with levies and asset seizures.

Attempts to Collect Through Other Means

Before moving forward with property seizure, the IRS typically tries to recover the tax debt through less invasive collection methods, such as:

• Bank Levies: The IRS can freeze and withdraw funds directly from a taxpayer’s bank account. Once the bank receives a levy notice, the taxpayer has 21 days to contest it before the funds are sent to the IRS.

• IRS Wage Garnishments: The IRS can instruct an employer to withhold a portion of the taxpayer’s paycheck and send it directly to the IRS until the debt is paid. Unlike other creditors, the IRS can take a substantial portion of wages, leaving taxpayers with minimal income.

• Federal Tax Liens: The IRS may file a public lien against a taxpayer’s assets, damaging their credit and restricting their ability to sell or refinance property. A lien does not immediately seize property but ensures that the IRS has a legal claim to it if sold.

If these collection efforts fail and the taxpayer still does not resolve their debt, the IRS will move to seize assets, including real estate, vehicles, retirement accounts, and business assets. To learn more about the IRS seizure of property, read our detailed blog on “What assets can the IRS seize?”

Legal Strategies to Prevent Seizure of Property

The following strategies provide the most effective ways to halt an impending seizure and protect property from IRS enforcement actions.

Requesting a Collection Due Process Hearing 

A Final Notice of Intent to Levy, issued through Letter 1058 or LT11, serves as the IRS’s last warning before it proceeds with property seizure. Taxpayers have 30 days from the date of this notice to request a Collection Due Process hearing with the IRS Office of Appeals.

During this hearing, taxpayers may challenge the levy by arguing that:

• The IRS did not follow proper procedures

• The taxpayer qualifies for an Offer in Compromise or installment agreement

• The tax debt is incorrect or not legally enforceable

• The levy would cause severe financial hardship

Failing to request a Collection Due Process hearing within the deadline results in a loss of appeal rights. However, taxpayers may still request an Equivalent Hearing within one year, though this does not prevent the IRS from proceeding with the levy.

Negotiating an Installment Agreement 

Setting up an IRS installment agreement allows taxpayers to repay their tax debt over time instead of facing immediate seizure. Once the IRS approves a structured repayment plan, it must stop all collection actions, including levies and seizures.

There are several types of IRS installment agreements, depending on the taxpayer’s financial situation:

• Guaranteed Installment Agreement: Approval is automatic for debts under $10,000 if the taxpayer can pay off the balance within three years.

• Streamlined Installment Agreement: No financial disclosure is required for tax debts under $50,000, and the IRS allows up to 72 months for repayment.

• Partial Payment Installment Agreement:  The IRS may accept reduced monthly amounts based on financial hardship for those who cannot afford full payments.

The IRS requires taxpayers to submit Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) or Form 433-B (for Businesses) to assess their ability to pay. If an agreement is approved, the IRS stops all seizure actions, but defaulting on payments may reinstate enforcement efforts. Not sure which installment agreement is right for you? Explore the full range of IRS Payment Plans to find the best solution for your tax debt.

Submitting an Offer in Compromise (OIC)

An Offer in Compromise allows taxpayers to settle their IRS debt for less than the full amount owed. This is one of the most effective ways to prevent IRS property seizure, but approval rates are low, with the IRS accepting only about 36 percent of offers in 2022.

To qualify for an OIC, a taxpayer must prove one of the following:

• Doubt as to Collectibility: The taxpayer cannot afford to pay the full tax liability.

• Effective Tax Administration: Full payment would cause significant financial hardship.

• Doubt as to Liability: There is a legitimate dispute over whether the tax debt is accurate.

Claiming Currently Not Collectible (CNC) Status 

If a taxpayer is experiencing extreme financial hardship, they may qualify for Currently Not Collectible status, which temporarily prevents the IRS from pursuing levies or property seizures.

To obtain CNC status, a taxpayer must:

• Prove that their income barely covers basic living expenses

• Show that they have no significant assets available for liquidation

• Submit Form 433-A or Form 433-F to document their financial situation

Once approved, the IRS suspends all collection actions, but penalties and interest continue to accrue on the outstanding balance. The IRS periodically reviews the taxpayer’s finances to determine if collection efforts should resume.

Using Bankruptcy as a Last Resort 

In some cases, filing for bankruptcy can prevent IRS asset seizure by either discharging tax debt or restructuring it into a manageable repayment plan. However, not all tax debts qualify for bankruptcy relief.

• Chapter 7 Bankruptcy: Can eliminate certain tax debts if they are at least three years old and meet additional IRS criteria.

• Chapter 13 Bankruptcy: Allows taxpayers to restructure their debt into a court-ordered repayment plan lasting three to five years.

Under 11 U.S.C. § 362, filing for bankruptcy triggers an automatic stay, which immediately stops IRS seizures, levies, and garnishments while the case is under review. However, the IRS may challenge the discharge of certain debts if tax evasion or fraud is suspected.

Why Hiring a Tax Attorney is Essential?

Unlike CPAs or tax consultants, a tax attorney provides legal privilege and confidentiality, meaning sensitive financial information cannot be disclosed to the IRS without the client’s consent. Additionally, attorneys:

• Have in-depth knowledge of federal tax law, IRS regulations, and collection procedures.

• Can handle cases at all levels, including IRS appeals, U.S. Tax Court, and Federal District Court.

• Are trained to identify procedural errors, legal loopholes, and settlement opportunities that non-attorneys may overlook.

When facing IRS asset seizure, time is critical. The earlier an IRS attorney intervenes, the better the chances of stopping or reversing the action. If you have received a Final Notice of Intent to Levy, seeking legal representation immediately can help protect your property and financial future. J. David Tax Law represents clients in all 50 states with proven success in stopping IRS seizures. Our award-winning tax lawyers fight for your rights and protect your property. Contact us today for a free consultation.