The IRS and Your Home

Do I have to let the IRS into my home?

Unless the IRS has a court order to enter your home, which is pretty rare, it is illegal for them to enter your house without an express invitation from you. During a field audit, the auditor will request to enter your house to discuss your audit or to verify deductions such as a home office. You can forbid them to enter, but it is more likely than not any home-related deductions you claim will be disallowed. If you don’t want the auditor in your home, seek professional representation and have the meeting held at your attorney’s office.

Can the IRS take my house?

The short answer is yes.

Unfortunately for taxpayers, the IRS is authorized by the Internal Revenue Code to seize a house or a business. The IRS has access to almost anything you own in order to collect back taxes, including your home. While the IRS can go right on ahead and take money from your bank account or wages, there is a process the agency must go through before acquiring your home.

The procedure of seizing your home depends on the size of the case. If you owe less than $5,000 in back taxes to the IRS, it is illegal for them to take your home. Before they even consider taking such a drastic step, the IRS must determine the equity of your home. If the equity of your home will not produce significant funds, they won’t even consider seizing it. Equity is determined by the quick sale value of your home which is a 20% reduction of the full market price. For example, if your house is worth $350,000 and the mortgage on it is $350,000, there is no equity in the house home and the IRS won’t seize it. On the other hand, say you were to owe $335,000 and the quick sale value was $370,000? The IRS is permitted to seize the house and use the remaining $35,000 to put towards your debt. The final hurdle the IRS must jump through in order to obtain your home is to get a court order from a U.S. District Court Judge or Magistrate. While the IRS can go directly into your bank account unchecked, they must get permission before taking your home. Once approved, the IRS will then padlock your house, post notices to the public, and sell any assets to the highest bidder.

It’s important to note that if you have already made a payment plan such as a pending Installment Agreement or an Offer in Compromise with the IRS, it is illegal for them to seize your residence.

If you owe money to the IRS, don’t expect them to immediately claim your home. Home seizure is a last resort for the IRS that usually results from uncooperative taxpayers. If you are being audited, owe money in back taxes, or are in fear of losing your home to the IRS, contact the Law Offices of Jef Henninger for professional assistance from lawyers who work aggressively to ensure the best possible outcome for our clients.



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