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Are any types of property exempt from IRS levies?

There are many things that could end up happening to an individual when they have failed to pay a federal tax debt assessed to them. For one, they could end up losing important property.

This is because one of the tools the IRS has for collecting delinquent taxes are levies. Tax levies are tax-related seizures of property. 

The range of different types of property the IRS can issue levies on is quite vast. The IRS can seize all sorts of things via a levy, such as bank accounts, wages, houses and cars.

However, levies cannot be issued in connection to everything. There are certain types of property federal law exempts for being able to be levied in relation to a federal tax debt. Examples of such exempt property include:

  • Certain benefits payments, such as workers’ compensation, unemployment benefits,  some kinds of public assistance payments and some kinds of service-connected disability payments.
  • Up to a certain value of trade/business/profession-required tools of the trade and books. 
  • Up to a certain value of furniture, provisions, fuel and personal effects.
  • Necessary wearing apparel.
  • Necessary school books.

Also, certain types of property, like business assets and residences, have special rules connected to them when it comes to levies.

Tax lawyers can help individuals who have a tax debt understand what property of theirs could be at risk of being lost to a levy. Such attorneys can also advise such individuals on what can be done to avoid being subjected to a levy and what to do if they receive a notice of a tax levy.  

Source: Internal Revenue Service, “Internal Revenue Manual – Part 5. Collecting Process – Chapter 17. Legal Reference Guide for Revenue Officers -Section 3. Levy and Sale,” Accessed Jan. 8, 2016

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