The IRS generally takes income or property through a process called "levy."  An IRS levy reaches all property unless exempted by federal law.

Under  federal law, the IRS cannot take the following from you:

• A certain amount of weekly wages (usually between $150 and $388 depending on your family size and tax filing status)
• Clothes and school books
• Family home if your tax debt is less than $5,000
• Furniture, household effects, fuel and provisions up to $6,780
• Tools of trade, business or profession up to $3,390

The IRS can take the following from you:

• Most retirement accounts if you have the right to withdraw your funds
• 15% of most welfare benefits (other than SSI disability, service-connected disability and JTPA assistance)
• Social Security benefits (even if less than $750 per month)
• Inheritances

These exemption amounts generally go up each year.  You can check IRS Publication 1490 to find out what current year exemptions are.

What Does the IRS Go After?

Although the IRS can take almost all property, it most commonly seeks to collect taxes by taking your bank account or wages.

More of your wages will be protected from the IRS if you have dependents living with you.  To claim the larger exemption from tax collection, you must let the IRS know many people live with you and what your tax filing status is. Make sure you respond to an IRS levy on your wages and claim your full exemption.

IRS policy discourages its officers from taking retirement accounts and homes if the debt can be collected through other means.

First, the IRS cannot take your principal family home if your tax debt is less than $5,000.

If your tax debt is more than $5,000, the IRS has to sue you in federal court and get a federal judge to approve the sale of your house. To get the judge's approval, the IRS has to show:

• the requirements for a levy were met;
• the tax is owed; and
• no reasonable alternative for collection of the tax exists

The federal judge also has some power to deny or delay the sale if the IRS only has a right to part of the house. For example, if you were terminally ill and another co-owner owed the tax, the judge could delay the sale of your house.

The IRS is also prohibited from selling houses where the sale price would be less than the expenses of the sale.

The IRS cannot sell your house if you have a pending refund or Tax Court lawsuit or if you have an offer in compromise or installment agreement pending with the IRS.  The Taxpayer Advocate may also intervene to stop the sale of your home in some cases.  Get a Form 911 to apply for help from the Taxpayer Advocate.

Generally, a bankruptcy lawsuit does not wipe out taxes owed to the IRS. However, a bankruptcy may stop or delay the sale of your house for taxes. Check with your bankruptcy lawyer.

You don't have to move out right away.  The IRS will not file an eviction against you. The person who bought your house must file a state court eviction lawsuit to kick you out.

Federal law gives you 180 days after the sale to buy your house back. To do this, you must timely pay the bid price plus interest of 20% per year.

If you can buy your house back, it makes sense for the buyer of your house at the tax sale to rent to you.  Talk to the buyer about becoming a temporary tenant until you can get the money to buy him out.

The IRS Sold My House Because My Ex-Spouse Owed Taxes.  Can I Get Any Money Back?

If your ex-spouse owned part of your house, the IRS can sell your house even though you owed no taxes. The IRS can force the sale of houses to collect taxes owned by any owner.

However, you have the right get your share of the net sale proceeds from the IRS. You may also have some rights against your ex-spouse.