If you owe money to the IRS (Internal Revenue Service), the IRS can lawfully take your property to pay the debt without your permission. The IRS releases statistics periodically of personal and real property that they have levied and seized from taxpayers. That listing is very instructive as to what property is subject to seizure by the IRs to settle delinquent federal taxes, penalties and interest owed to the U.S. States Government. Take a look! Which of your assets are at risk for delinquent income, estate or gift taxes?

1. Property Exempt from IRS Levy & Seizure
What Property Can’t the IRS Take to Pay Back Taxes?
By: Coleman Jackson, PC
Immigration & Tax Law Firm’s Site | http://www.cjacksonlaw.com
Phone Numbers: English (214) 599-0431 | Spanish (214) 599-0432
July 23, 2014
If you owe money to the IRS (Internal Revenue Service), the IRS can lawfully
take your property to pay the debt without your permission. The IRS releases
statistics periodically of personal and real property that they have levied and
seized from taxpayers. That listing is very instructive as to what property is
subject to seizure by the IRs to settle delinquent federal taxes, penalties and
interest owed to the U.S. States Government. Take a look! Which of your assets
are at risk for delinquent income, estate or gift taxes?
The IRS prefers assets that are “liquid” – meaning easily convertible to
cash. This is primarily bank accounts and wages. And although retirement
accounts are cash assets, the IRS tends to avoid them. The IRS avoids seizing real
and personal properties, such as, houses, cars, household goods, and business
equipment.

2. Listed below are “Exempt Properties” that are not subject to IRS levy
and seizure:
Seizure of a Residence/Principal Residence
1. IRC § 6334(a) (13) (A) exempts from levy any real property of the taxpayer
used as a residence by any individual (except for real property that is
rented), if the levy amount does not exceed $5,000. For practical purposes
this $5,000 exemption has not kept pace with economic times. Real
property is at risk; but for, the due process and the compassionate
protections in 2 and 3 below.
2. IRC § 6334(e) (1) requires a court order before administrative seizure of
certain principal residential property owned by the taxpayer when seizure
is otherwise permissible. These include the principal residence of:
a. the taxpayer
b. the taxpayer’s spouse
c. the taxpayer’s former spouse
d. the taxpayer’s minor child
3. Although not legally required, written approval by the IRS Area Director is
required administratively before seizure of any property used by any
person as a principal residence.
4. After the required approval is obtained, a suit recommendation package is
typically prepared for Area Counsel. The procedures and guidelines used by
the IRS for preparing a seizure recommendation package for the IRS Area
Director’s approval and for preparing the suit recommendation package are
set forth in (Internal Revenue Manual) IRM 5.10.2.18.
5. IRC § 6334(e) (1) provides that there shall not be any levy on a principal
residence unless approved by a judge or magistrate (in writing). At the IRC
§ 6334(e)(1) hearing, the Internal Revenue Service will be required to
demonstrate that (1) the requirements of any applicable law or

3. administrative procedures relevant to the levy have been met, (2) the
liability is owed, and (3) no reasonable alternative for the collection of the
taxpayer's debt exists.
The taxpayer can be represented during this hearing challenging the IRS on
the relevant facts and law.
Seizure of Business Assets
1. IRC § 6334(a) (13) (B) (ii) and IRC § 6334(e) (2) require the written approval
of the IRS Area Director or Assistant Area Director before seizure of
certain business assets. "Business assets" is defined as any tangible
personal property or real property (except for rental property) used in the
trade or business of an individual taxpayer.
2. This approval is not required if there has been a jeopardy determination.
3. Approval may only be given after determining that the taxpayer’s other
assets subject to collection are insufficient to pay the amount due, together
with the expenses of the proceeding.
4. With respect to the seizure of state permits for the harvest of fish or
wildlife in the trade or business of an individual taxpayer, the term "other
assets" includes future income that may be derived by the taxpayer from
the commercial sale of fish or wildlife under the permit.
5. This approval requirement is only for assets used in the trade or business of
an individual taxpayer. Thus, this approval is not required before seizure of
the business assets of a corporation or partnership.
6. This approval requirement is only for tangible business assets. Tangible
property is, in general, property that is physically seized for the purpose of
being sold, such as inventory and vehicles. In general, intangible property
represents property rights with no separate physical existence that are
reached by levy, such as certificates of stock or copyrights. Any questions as
to whether a certain business asset is tangible property and therefore,
whether Area Director approval is required prior to seizure, is typically
referred to Area Counsel for their opinion.

4. The taxpayer should seek tax counsel with respect to issues involving the
characterization of property and procedural due process issues.
Property Exempt from Levy
1. IRC § 6334(a) exempts certain property from levy. In addition to
residences/principal residences and certain business assets which may be
exempt as discussed above, the following property is exempt from levy:
a. Wearing apparel and school books necessary for the taxpayer or
members of his family
b. Fuel, provisions, furniture, and personal effects in the taxpayer’s
household, up to a specified, inflation-adjusted amount
c. Books and tools of the trade, necessary for the trade, business or
profession of the taxpayer, up to a specified, inflation-adjusted
amount
d. Unemployment benefits {the unemployment benefit exemption has
been strictly construed and does not encompass retirement and
survivors benefits or disability insurance payments under the Social
Security Act. Kane v. Burlington Savings Bank, 320 F.2d 545 (2d Cir),
cert. denied, 375 U.S. 912 (1963).}
e. Undelivered mail
f. Certain annuity or pension payments: payments under the Railroad
Retirement Act, benefits under the Railroad Unemployment
Insurance Act, special pension payments received by Army, Navy, Air
Force, and Coast Guard Medal of Honor recipients, and annuities
based on retired or retainer pay under Chapter 73 of Title 10 of the
United States Code- although as a matter of policy, the Internal
Revenue Service has (typically) placed some administrative
restrictions on levying on retirement income and retirement assets,
those listed in IRC § 6334(a) are the only ones exempt from levy as a
matter of law.

5. g. Workmen’s compensation (including amounts payable with respect
to dependents)
h. So much of the salary, wages, or other income as is necessary to
comply with a judgment of a court requiring the taxpayer to
contribute to the support of his/her minor children, but only if the
judgment was entered before the date of the levy
i. An amount determined under IRC § 6334(d) as a minimum exempt
amount of wages, salary, or other income
j. Certain service-connected disability payments
k. Certain public assistance payments
l. Any amount payable under the Job Training Partnership Act
Effect of State Law on Federal Levy Exemptions
Just as state law (including state-defined exemptions) cannot prevent the
attachment of the federal tax lien, no state law provision can exempt property or
rights to property from levy for the collection of any federal tax. Treasury
Regulation 301.6334-1(c).
This Presentation is written by Coleman Jackson, PC for informational and educational purposes only. Laws,
policies and administrative procedures & practices are subject to change without prior notice.
This presentation does not create an attorney-client relationship.
Coleman Jackson, PC | Tax & Immigration Law Firm. http://www.cjacksonlaw.com/ | 214-
599-0431 | 214-599-0432 | 6060 North Central Expy, Suite 443, Dallas, TX 75206
Spanish