An IRS auction occurs when the Internal Revenue Service, or IRS sells items that they have confiscated. This is sometimes known as the IRS collection process, or "repossession." This usually happens due to a failure to file tax returns or other tax-related violations. IRS auctions sometimes allow the public to obtain various items, which will vary depending on the state as well as the particular auction venue.
An IRS auction is also known as a tax auction. The tax auction will occur when the taxpayer fails to pay their federal or state taxes. This would result in the IRS placing a lien and seizing the taxpayers’ property.
What Types of Items Are Sold at IRS Auctions?
IRS auctions involve sales of items like:
- Personal property such as household goods, jewelry, electronics, etc.
- Real property such as houses or interests in land
- Stocks and other securities
Basically, any type of asset you own can become subject to a tax lien if you don’t pay taxes. The lien basically allows the government to assert their interest in your property and obtain title to it. A commonly repossessed item is a car or other type of transportation vehicle.
Can I Contest an IRS Repossession?
You usually have 30 days to respond to notices sent from the IRS. In that time, you can respond in various ways that would help prevent a tax lien from being put on your property. For instance, you can respond with actions such as:
- Installation payment agreements (paying back your debt in portions over time)
- "Offer in compromise" – agreeing to pay back only a portion of your debt (not available in all cases)
- Claiming undue hardship, unavoidable absence, military service, or other reasons for the non-payment
There are several other responses you can issue to prevent your property from being sold at an IRS auction. You may need to hire a lawyer for help with your legal claim.
What Is Redemption of Property?
Before an IRS auction or the sale of property, any person whose property has been levied upon shall have the right to pay the amount due, together with the expenses, to the Secretary at any time prior to the sale of property. If the property is real property, an owner of the property can redeem the property even after it’s sale at any time within 180 days.
How Should I Respond to the IRS’s Action?
If you receive a “Notice of Intent to Levy,” you should respond within thirty days of receiving the notice. When you are responding to the notice of intent to levy, you should respond by providing:
- Complete history of the incident
- Complete tax payment history of the debtor
- Why compliance with tax code was not met
- Witnesses, documentation or any other evidence which could prove the circumstances you describe
- Your exact reason for failure to comply
Do I Need a Lawyer for Help with IRS Auction Issues?
Dealing with IRS issues can sometimes be overwhelming due to the many laws that are involved in the process. You may wish to hire a tax lawyer for help in dealing with the IRS collection process. Your attorney can explain what you should do to proceed, and can assist you with the legal process. Also, in the event of a lawsuit, your lawyer can represent you during the court hearings.