The IRS has been stepping up enforcement recently, with an increase in audits. Indeed, one in eight millionaires was audited during the fiscal year 2011, according to the IRS. The IRS has also reported that it is increasing its efforts to catch tax evaders who move their money offshore.
It’s not just auditing that has increased over the years, though. There has been an increase in liens, levies, and seizures during the last 10 years. From 2001 to 2011, the IRS has been more active in making sure that it receives the revenue it feels is due. The increase has been huge, far eclipsing the gains made by tax returns over the same period.
Capturing What’s Due
Over the course of the last decade, the IRS has been making a conscious effort to recover what is due. Tax return growth from 2001 to 2011 was only 10%. We hear a lot about the increase in tax returns, and money going back to citizens, but what we don’t realize that the IRS has been receiving much more back in terms of liens, levies, and seizures. Here’s how much each of those areas have grown:
- Tax Liens: Increased 144.56%
- Tax Levies: Increased 456.15%
- Seizures: Increased 231.62%
It’s clear that between the audits and other measures, the IRS is boosting efforts to make sure that it receives what’s due.
What Are Liens, Levies, and Seizures?
In order to understand the way that the IRS has increased revenue growth with the help of liens, levies, and seizures, it helps to understand what these items are. You should also be aware of the ways that they can be used so that the government can get the taxes it feels are owed to it.
IRS Tax liens are placed on property. A tax lien is placed on the property, and that means that some of the value of the property is required to go toward tax payment. It’s a way that the IRS can ensure that some of the taxes are paid. If the property is sold, then the IRS gets its share. Property can include personal items, as well as financial assets, in addition to real estate.
Tax levies are essentially a seizure of your assets in order to help pay your taxes. Your bank accounts, wages, investments, inheritances, IRAs, and even accounts receivables for your business, can be seized in order to discharge your tax obligation. When the IRS seizes your wages this is referred to as IRS tax wage garnishment. The fact that tax levies have increased so dramatically in the last decade is an indication that the IRS really is aggressively exercising its ability to just go for assets to cover unpaid taxes.
Seizures involve the taking of physical items. Levies are the seizure of intangible assets. Seizures, by contrast, involve actually personal property of value, which can then be auctioned off in order to discharge what you owe. This seizure can be your home or your car, or some other valuable personal asset. Unlike a lien, which requires that the IRS be paid back as a result of profits, a seizure is an outright taking of that property.
You do have the option to appeal liens, levies, and seizures, though. If you are subject to these actions, it’s important that you get a tax professional to help with your appeal such as a tax attorney, Enrolled Agent, or CPA.