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What Assets And Property Are Exempt From IRS Seizure And Levy

IRS Property and Asset Seizure Auction

The Internal Revenue Service (IRS) can be very aggressive when collecting from debtors. The IRS applies certain tactics to compel the taxpayer to comply and to minimize the balance owed on a taxpayer's accounts. One of the tactics adopted by IRS for collecting from tax defaulters are the use of liens and levies. IRS can levy all the property that a taxpayer owns in an attempt to satisfy an outstanding obligation. However, there are some assets and property that IRS cannot seize or levy. The following web page will guide you on how IRS uses liens and levies, and the assets and property protected from IRS seizure.

Tax Levies

If the IRS cannot recover overdue taxes through a lien, their next resort is to use levies. An IRS levy is the practical seizureof the assets of a taxpayer. It is the final way that taxation is enforced when all attempts at collecting taxes fail. IRS will issue tax levy notices to financial institutions and employers associated with the taxpayer.

Contesting an IRS Tax Levy

Before IRS seizes property or money, they must issue you with a notice of their intent to levy and a letter explaining your rights to appeal. The notice should be either personally delivered to you or mailed to your home address. The notice has to be issued 30 days before the IRS seizes your assets or property.

If your appeal is turned down by the appeals office, you may challenge an IRS levy in the Tax Court. This is usually an expensive legal affair, and could cost you up to $ 10,000 in legal costs and fees.

If you are unable to contest an IRS seizure, you can use other strategies to secure your assets. This includes transferring the ownership of your property or assets, joint ownership, showing that a levy will prevent you from going to work, moving your financial accounts, depositing your money into a retirement account, and filing for bankruptcy.

Assets and Property Exempted From IRS Seizure

Some of your assets or possessions are legally exempt from seizure by the IRS levy scheme. Other possessions are protected by the policy considerations by IRS.

Exempt Assets


  • Clothes· Personal effects that amount to $7,700. This includes livestock, furniture, provisions, and fuel

    · A professional's tools of trade including books and appliances up to $3,860

    · Undelivered mail

    · Workers' compensation benefits

    · Unemployment benefits

    · Child support

    · Disability payments

    · Minimum exemption for salary, wages, and other related income

    · Pensions such as the Railroad Retirement Act and Congressional Medal of Honor benefits

    · Welfare and Social Security

    All the assets not included on the IRS exempt list can be seized by IRS. The best way to avoid seizure is to plead your case to the IRS and appeal 30 days before they take action. However, if all your efforts at negotiation and appeal fail, you can apply the strategies outlined above to secure your assets.


Tax Lien

This is a notice that informs the public that you owe the IRS. A lien gives IRS the right to seize the proceeds that a defaulting taxpayer has acquired from the sale of their real estate. Liens are meant to prevent defaulting tax payers from the sale of property until they have paid their dues to the IRS. In the event that the tax payer sells the property, the buyer inherits the lien. In this case, IRS has two people it can pursue for its money.

Liens are classified into two; the first type is a silent lien, and the other type of lien is a notice sent to the recorder's office where the tax payer lives. The second type of lien is taken into account by credit reporting agencies, and has a negative impact on the credit score of the tax payer. The only way a taxpayer can release themselves from a lien is by paying their tax dues in full, including penalties and interest. A taxpayer can also be freed from a lien by declaring bankruptcy. Tax payers can also be released from liens if the statutory period for tax collection is overdue.

Filing an Appeal For a Tax Lien

You can protest a lien through the IRS Office of Appeals. However, you should first contact the head of the unit filing the tax lien. If you fail to prevent them from enforcing the lien, you can send a "Collection Appeal Request" to the collection authority. Your appeal will be processed within a period of five days. In many cases, filing an appeal does not prevent a tax lien. The most effective method is to contact the Taxpayer Advocate Service or IRS and convince them how a lien will negatively affect your credit score and ability to clear your tax debts.

Mary King
Attorney Mary King

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