We’ve all heard the horror stories and seen the drama of an IRS-type seizure play out (think Schitt’s Creek). But in reality there are specific assets that the IRS cannot take. You may be wondering which of those assets are yours to keep.
The 5 untouchable items
- The IRS cannot take the clothes off of your back or the furniture under your elbows (as long as the table is not valued at more than $7,720).
- They cannot take the books you need for schooling or study.
- The IRS is not allowed to take work tools that have a value of less than $3,520. You are also allowed to keep your personal items that are valued at less than $6,250.
- The IRS cannot garnish more than 15% of your Social Security.
- Because you do not have control over it, the IRS cannot access your irrevocable trust.
It’s helpful to know that in fact the IRS rarely seizes assets. In fact, according to H& R Block, in 2017 the IRS seized homes, cars and equipment only 323 times on levies that were issued to employers and banks.
The three most common reasons for property seizure by the IRS are committing fraud, hiding assets and withholding payroll taxes and not paying them to the IRS.
Unless there are large under- or overstatements of income, the IRS has three years to perform an audit. This is exactly three years from the due date, not the date you filed. However, if you file for an extension, then that date is the date used.
The real purpose of the IRS
Founded on July 1, 1862, the intended purpose of the IRS is threefold:
- To provide service to the taxpayer
- To collect taxes
- To enforce the tax laws
The stated mission of the IRS is to, “Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”
What to do if you do not agree with the IRS about amount owed
Do not ignore the notices that the IRS sends you. You do not want your accounts levied and your wages garnished. Instead, consult with a tax attorney about how to respond given the circumstances of your case. There may be options available that you are able to utilize and have not considered.