IRS Tax Levies: Can the IRS Really Seize Your Inheritance, Benefits, and Accounts?

Posted on in IRS Issues

Illinois tax attorney, IRS rights, Owing money to the IRS can be a stressful and frightening predicament. The calls and threats to seize your home or bank account only further exasperate the worry over what will happen next if you do not come up with the money to resolve your IRS debt. But what, exactly, do they have access to? Can they, for example, take your social security benefits? What about an inheritance? Or your retirement account? Unfortunately, the answer to all of the above is a strong and resounding, “yes.”

IRS Tax Levies and Your Inheritance

An inheritance – money or assets that did not belong to you until after the death of a loved one – are often placed in a trust account. Often, it is difficult for you, the heir, to access these funds in a quick or easy manner. But the Internal Revenue Service – a government entity – can gain access long before you ever see a penny. In some cases, you may not ever see the inheritance at all.

Take, for example, the recent case in which an Arizona resident who owed $701,079 to the IRS and inherited $173,545.12 upon his mother’s passing. After a long, drawn-out battle, the IRS won in court and surmounted that they did, in fact, have the right to seize the trust for back-owed taxes.

In another case, three sons inherited their mother’s condo. One of them owed the IRS. Despite the fact that he had formerly received assistance from his mother, and therefore backed out of any entitlement to the condo, the IRS was able to seize what would have been his portion of the proceeds from its sale.

IRS Tax Levies and Your Retirement Account

While certain retirement plans are protected from most creditors, the IRS can and does place tax levies on retirement accounts, including stock bonus plans, IRAs, profit-sharing plans, pensions, and other retirement plans. It is not an easy process for them, but if another viable option for recovering funds owed to them is not found, they can and may seize your retirement account (even if it is your only income). Keep in in mind, however, that if you are living on a limited income, supported only by your retirement account, the IRS may only seize a monthly portion.

IRS Tax Levies and Social Security Benefits

Social security benefits are thought to be sacred benefits. However, these benefits are typically received because of a contribution you made while working. As such, the IRS is able to access a portion of your social security benefits if no other viable option or arrangement has been made. However, there are a few exemptions under IRC 6334(a)(11). A skilled IRS tax attorney can help you determine if your social security benefits are eligible under this exclusion.

Facing an IRS Tax Levy? Contact an Experienced IRS Tax Attorney

If you are facing a possible tax lien or levy from the IRS, do not wait for things to spiral out of control. Instead, contact the Law Offices of Eric Zelazny immediately. Our skilled Tinley Park IRS tax lawyers have been helping individuals deal with their IRS issues since 1996 and are prepared to personally handle your case. Known for crafting creative and effective solutions, we can help you move forward with your life. Schedule your free initial consultation to get started. Call 708-888-2299 today.

 

Sources:

https://www.irs.gov/irm/part5/irm_05-011-006.html

https://docs.justia.com/cases/federal/district-courts/arizona/azdce/2:2014cv01771/876920/88

https://docs.justia.com/cases/federal/district-courts/kentucky/kyedce/2:2013cv00045/72195/21

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