The powers that the IRS has to collect on unpaid taxes may seem mythical and legendary; especially when it comes to how the federal government may seize property and freeze financial accounts. However, in recent years, this tactic has become a controversial measure given how quickly the IRS has acted to take money from small business owners and how it has failed to return such property.
After being pressed by legislators in, congressional hearings the IRS indicated that it would change its seizure policy. Testimony was taken to explain how the IRS, in the midst of investigating possible crimes, seized money and property but failed to return it after finding no wrongdoing. In fact, the IRS reportedly took $43 million from 618 people between 2007 and 2013.
While the IRS reportedly changed its policies in 2014, those who lost their property are still having a difficult time getting it back. Through additional hearings in March, legislators expressed how frustrated they were with the IRS’ lack of action. The IRS Commissioner wrote legislators explaining another policy change to seizure actions and that it was investigating cases where property had yet to be returned.
The story exemplifies the need for experienced legal counsel when the IRS threatens legal action against small businesses and taxpayers over unpaid taxes. After all, the IRS must follow the law before obtaining court orders to seize property; and despite its vast powers to collect, it is not immune from legal challenges.
If you have questions about proceedings involving asset foreclosures, an experienced tax attorney can help.