It sounds like something out of a movie: the IRS shows up to take your car, house, or other property because of unpaid taxes. Most people think it could never happen to them. The truth is that, while rare, the IRS does have the power to seize physical property and, according to a new government watchdog report on IRS property seizures, mistakes often happen when it does.

Here’s what the new oversight report showed, what kinds of property the IRS actually seizes and where, and how to protect yourself if the IRS ever threatens to take your assets.

How Common Are IRS Property Seizures?

Each year, millions of taxpayers fall behind on their taxes. The vast majority of the time, when a taxpayer does not cooperate, the IRS relies on wage garnishments and bank account seizures to collect what’s owed. But in some cases, when debts are large and unpaid, the IRS can take physical property.

In the 2024 fiscal year (from July 1, 2023 through June 30, 2024), the IRS carried out just 105 property seizures nationwide. It's a tiny fraction of all collection cases, but, for each person it is life changing.

Over the last 9 fiscal years, the number of seizures have declined significantly. Much of this was caused by a sharp reduction in collection action following the pandemic. But, it is possible IRS property seizures may increase in the coming years as the IRS ramps up collections once again.

Where and What the IRS Seizes

The TIGTA report shows that IRS property seizures weren’t limited to any one region. They happened across the country, from large metropolitan areas to smaller communities. Most seizures fell into a few main categories:

1. Non-Primary Residences: secondary and and vacation homes.
2. Other Real Estate: rental properties, business properties, land.
3. Vehicles: cars, trucks, and RVs.
4. Other Assets: furniture, jewelry, business inventory, etc.

The number of seizures by property were as follows:

Together, these categories accounted for more than $6 million in taxpayer assets seized and sold.

As you can see, the vast majority of seizures were of real property including rental properties, vacation homes, and business properties. It is important to note that the IRS did not seize any principal residences during the 2024 fiscal year.

The IRS also provided data on where the seizures took place:

From this information, we can see that the IRS made seizures all across the country. The IRS has offices in every state, and treats a taxpayer the same whether they are in New Jersey or Kansas.

What the Watchdog Found

TIGTA’s audit of over 100 seizures uncovered several problems:

• Proceeds misapplied: in at least 8 cases, money from sales wasn’t correctly credited to taxpayers’ accounts.
• Seized in error: the IRS wrongfully seized property in 5 cases, then had to reverse the action.
• Equity not checked: in 4 cases, the IRS didn’t properly confirm there was enough equity in the property to justify a seizure.
• Reporting problems: more than $1.1 million in seized property wasn’t included in official IRS financial statements.

Even when corrected, these mistakes create unnecessary hardship for taxpayers, sometimes leaving them without a vehicle or property for weeks or months before resolution.

What Are Your Rights?

If the IRS ever moves toward seizing your property, you have protections under the law:

1. Advance Notice: the IRS must send a Notice of Intent to Levy to your last known address at least 30 days before acting.
2. Right to a Hearing: you can request a Collection Due Process (CDP) hearing to challenge the action in front of an independent appeals officer. If that does not work, you have the right to challenge the proposed action in tax court.
3. Hardship Protection: the IRS can’t seize assets if it would create severe financial hardship.
4. Court Approval: to take your primary residence, the IRS needs a federal court order.

What This Means for Taxpayers

So, does the IRS really take physical property? Yes, but it’s rare. However, when it happens, they don’t always get it right. The latest oversight report shows that seizures happen across the country, involving everything from cars to homes, and errors still occur. This means that knowing your rights is critical.

For homeowners and business owners with tax debt, the key is to act before it gets this far. Options like payment plans, offers in compromise, or currently not collectible status can prevent the IRS from taking drastic action.

If you’ve received an IRS notice threatening levy or seizure, don’t wait. At Pizzale Tax Services, we help NJ taxpayers resolve IRS problems before they spiral. Contact us today to protect your property and your peace of mind.