What Is an IRS Auction?

What Is an IRS Auction?

All citizens and permanent residents living in Washington DC and other states in the U.S. are obligated to pay income taxes to the federal government through the IRS. 

Failure to file your taxes is a criminal offense accompanied by criminal penalties, including time in jail, fines, and civil action such as seizure and auction of the individual’s property. 

This guide focuses on an IRS auction, from definition to everything you need to know. 

Understanding an IRS Auction

As mentioned earlier, a failure to pay your taxes in full can cause the IRS to possess your property, followed by a public auction. This process is also called the IRS collection process or repossession. 

Properties within the IRS reach in terms of possession include personal properties, including household goods, jewelry, vehicles, and electronics. Also, the IRS can sell real property, stock, and securities. It’s almost every asset you can think of. 

Understanding the Collection Process

The IRS cannot seize or auction a tax defaulter’s assets without notice or following the collection process. “The first indicator that the IRS is investigating you is the receipt of a bill informing you that you have unpaid taxes. The bill also highlights fines accrued interests on the unpaid taxes, the deadline for paying owed taxes, and consequences for failure to pay,” says Washington D.C. attorney John Pontius from Pontius Tax Law, PLLC. 

After receiving the bill, you can pay what you owe via credit card, a check, or money order to the United States treasury. Failure to pay outstanding taxes can be quite costly as it means accruing daily compounding interests and monthly late payment fees. 

So, where possible, take a loan to clear the debt or get the help of an IRS lawyer to make a deal with the IRS, also known as an offer in compromise. Offer of compromise is not available for all cases. Your IRS lawyer can help you determine whether it applies to your case.

IRS’s Statute of Limitations

IRS’s statute of limitation runs for ten years to collect unpaid taxes. So, if the IRS doesn’t come after your property within ten years of owing tax debts, your debt is wiped out. The IRS’s statute of limitation starts running when the IRS notifies an individual of owed debts. So, there is no statute of limitations for failure taxpayers who fail to file their tax returns. It only applies to situations where the IRS has your case and doesn’t take action to repossess your property within ten years, which is quite a rarity. 

Responding to IRS notices for your failure to pay includes undue hardships, unavoidable absence, military service, or other unavoidable reasons for absence. Also, it is important to note that the seizure of property doesn’t translate to automatic auction. 

The individual whose property the IRS has seized gets an opportunity to redeem the property by paying outstanding taxes and expenses incurred through the seizure. For real property, you can still redeem your property within 180 days after its auction, but the process can be a little more complex, so you may want to work with an IRS lawyer.

Do I Have To Get an IRS Lawyer

You do not have to get a lawyer when navigating an IRS collection process. However, it’s important to understand that the process can be overwhelming because of the many laws and processes involved. 

Also, it could mean losing your property, so having an IRS lawyer guiding you through the process and protecting your interests is in your best interest.