Will the IRS Ever Return Seized Property?

The IRS is generally required to send you a notice before levying or seizing your property. You may be able to prevent a levy by timely requesting a Collection Due Process (CDP) hearing, and negotiating a payment plan or otherwise contesting the levy. You have 30 days from the date of the notice to request a CDP hearing.

There are situations where the IRS is not required to send you a pre-levy notice, and can take your property without giving you a chance to contest the levy. State tax refunds can be taken without notice, and the IRS can levy without notice if they believe that collection of the tax is in jeopardy.

There are also other situations where you may not get the chance to contest the levy until after your property has been seized. The IRS sends notices to your last known address, and you may never receive these notices if the IRS does not have your current address. You may also simply be unaware of your CDP rights or the 30-day deadline, and miss your chance to request a CDP hearing. Payroll taxes are also subject to different rules.

If the IRS seizes your real estate or other tangible property, it will sell your interest in the property and apply the proceeds to your tax debt. The IRS will announce the sale to the public, and then wait at least 10 days before the sale.

You can attempt to get your property back after it has been seized, and there are a few different situations where the IRS will return property after it has been seized. If you pay the amount you owe, or agree to enter into an installment agreement, the IRS may return the seized property.

The IRS may also return seized property if it is causing immediate economic hardship, or if you can successfully dispute the underlying tax obligation that caused the levy. If the IRS refuses to release the levy, you can appeal this decision, either before or after your property has been seized, under the IRS Collection Appeals Program.

If your property is sold, you may still be able to request to have the proceeds from the sale returned to you within nine months after the sale.

Even if you are successful in getting your seized property back, you may still owe the underlying tax debt. A tax attorney can help you reduce the amount you owe with an Offer in Compromise or innocent spouse relief, or enter into an installment agreement depending upon your unique circumstances.