A U.S. District Court has upheld the IRS’ right to a levy on a taxpayer’s home for unpaid taxes. In the case, the taxpayer owed $250,000 in unpaid income tax, penalties, and interest. The IRS had previously tried to collect the
liability from the taxpayer’s other assets without success, leaving no other alternative than to levy a tax lien on the home. The court approved the levy because the taxpayer failed to show any reason why it should be denied.
Even while many foreclosures are being successfully evaded in court, courts are unwilling to refuse the IRS’s right to levy on a tax lien. The taxpayer in this case was in the process of trying to obtain a loan against his house to pay his tax liability, but the court would still not deny the IRS their right to a levy. Although the IRS stated it would try to work with the taxpayer to figure out a payment plan and has been encouraged to do so in other cases, foreclosure on a lien remains a viable option for the IRS to ensure payment on outstanding tax liabilities.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors