For many people, the thought of the IRS seizing their assets seems like something out of a movie. However, if you have a significant tax debt and you ignore the problem, the IRS has the legal authority to take your property to satisfy your debt. The IRS does this through a powerful tool called a levy, which is the legal seizure of property. This can include your bank accounts, your wages, and even your home.
At ALTO Tax Relief, owner and CPA Alex Torres helps individuals and businesses in the greater Atlanta, Georgia area navigate these serious situations. With over 25 years of experience in the corporate financial world of major Fortune 100 companies, she is an expert in identifying risks and implementing strategies to protect your assets from aggressive IRS collections.
What Assets Are Vulnerable to an IRS Levy?
The IRS has the authority to levy a wide range of assets to collect unpaid taxes. It is a powerful tool, and it is vital to know what is at risk.
- Bank Accounts: A bank levy is one of the most common and immediate forms of collection. The IRS sends a notice to your bank, instructing them to freeze and seize the funds in your account. The bank is required to hold the funds for 21 days before sending them to the IRS, giving you a small window of time to act.
- Wages: The IRS can issue a wage garnishment to your employer, requiring them to withhold a portion of your paycheck and send it directly to the IRS until your debt is paid off.
- Vehicles and Other Personal Property: The IRS can seize and sell valuable personal property such as vehicles, boats, and even collectibles to pay off your tax debt.
- Business Assets: If you are a business owner, the IRS can levy your business’s bank accounts, accounts receivable, equipment, and inventory, effectively shutting down your operations.
- Real Estate: While it is a last resort and requires a court order, the IRS can place a lien on your real estate and eventually seize and sell the property to satisfy the tax debt.
Proactive Asset Protection Strategies
The key to protecting your assets from the IRS is proactive planning. It is crucial to have a plan in place before you receive a tax notice. The goal is not to hide assets but to legally organize them in a way that minimizes your risk.
- Business Entities: For business owners, forming a Limited Liability Company (LLC) or a corporation is a foundational step in asset protection. These entities create a legal separation between your personal and business liabilities. In most cases, a judgment against your business cannot be used to seize your personal assets.
- Retirement Accounts: The good news is that most qualified retirement accounts, such as 401(k)s and pension plans, have strong protection from federal creditors under the Employee Retirement Income Security Act (ERISA). The protection for IRAs is also strong, though it has some limitations.
- Proper Asset Titling: How you own your assets matters. Holding assets in a joint tenancy with a right of survivorship or as tenants by the entirety can provide a level of protection from creditors. However, it’s important to consult with a professional to ensure this is done correctly.
Georgia State Laws on Asset Protection
For taxpayers in Georgia, it is vital to understand state laws that can offer additional protection from creditors, including the Georgia Department of Revenue.
- Georgia’s Homestead Exemption: Georgia law provides a limited homestead exemption that protects a portion of the equity in your primary residence from creditors. While the protection is not as extensive as in some other states, it can provide a buffer for a small portion of your home’s value.
- Wage Garnishment: Georgia law provides specific protection for a portion of your wages from garnishment. Generally, creditors can only garnish a portion of your disposable income, which is the amount left after legally required deductions.
- Fraudulent Transfer Laws: It is crucial to understand that asset transfers made with the intent to defraud creditors can be undone. The Georgia Uniform Fraudulent Transfer Act (UFTA) gives creditors the power to “claw back” assets that were transferred to friends or family members to evade tax liability.
Don’t Wait Until It’s Too Late
Ignoring a tax problem will only lead to more aggressive collection actions, with the IRS having the power to seize your assets. The best time to protect your assets is before you get a tax notice.
Alex Torres, a CPA, has the expertise to help you with proactive tax planning and asset protection strategies. Her more than 25 years of experience in the corporate world gives her a unique ability to handle complex financial situations and help you develop a comprehensive plan to protect your financial future.
Don’t let tax debt control your life. Contact ALTO Tax Relief in the greater Atlanta area at (404) 781-9177 for a confidential consultation today. Proudly serving all of Georgia.
