Are my pension, 401k, and IRA accounts subject to seizure for unpaid taxes?Yes, if you have an unpaid federal income tax liability to the Internal Revenue Service (IRS), the IRS has the authority to seize your retirement accounts, such as your pension, 401k, and IRA or Roth IRA accounts. The IRS can even take your Social Security benefits.
However, even though the IRS has the power to take these assets from you, the IRS only exercises this power in extreme situations, ones where the taxpayer has essentially left the IRS no other options to recover the money they are owed. First, the taxpayer has to create the unpaid tax liability through their actions. This can be because the taxpayer does not file his federal income tax when he owes money or the taxpayer files his taxes without paying the tax liability he owes.
Next, the taxpayer has to ignore the various notification efforts from the IRS. When you have an unpaid tax liability, the IRS will be sure to let you know and take every step they deem necessary to be sure it is completely clear that you owe money for your taxes and that you need to pay it. It takes a concerted effort on the part of the taxpayer to ignore these notifications. While it may be possible for a taxpayer to initially fail to pay their taxes by accident, the IRS knows that if the taxpayer does not address their tax liability after all the notifications that the taxpayer is avoiding the tax on purpose.
Finally, the IRS will notify the taxpayer of their intent to place a levy on their assets and then they will obtain that levy to begin seizing your property. Even at this stage, the IRS may save the seizing of your retirement accounts until most other assets are exhausted. Again, the seizing of retirement accounts will likely only occur if the taxpayer is unwilling to establish a payment plan or other settlement arrangement to address the tax debt.
What steps can I take to protect my retirement accounts?
As highlighted above, if you are willing to work with the IRS to address your tax liability through an offer in compromise or other available payment options, the IRS will likely never have to resort to seizing your retirement accounts or any of your other assets. But if you are unsure of exactly where to start given your current circumstances, you can get help from a tax lawyer.
A tax lawyer specializes in tax issues such as those commonly encountered when taxpayers are unable to pay the taxes they owe. A tax lawyer will be able to evaluate your unique situation, explain the available options, and walk you through the steps necessary to take care of your tax liability once and for all.
If you complete the short form below, you can get started in receiving the help you need. A tax attorney will work with you with complete confidentiality, providing an initial review of your situation free of charge and without further obligation. So get help today so that you can live without the burden of an unpaid tax liability tomorrow.