What Is a Notice of Seizure?

A notice of seizure is a formal notification that a revenue agency has obtained legal authorization to take possession of and liquidate the assets of a taxpayer as a means of settling an outstanding tax debt. Typically, this type of activity occurs when all other possible solutions to settling the debt have proven fruitless. The terms of a notice of seizure sometimes provide specifics as to when the actual seizure of the assets will take place and may even include some details regarding the assets that will be seized and sold at an auction.

The scope of information that is included on a notice of seizure will vary, based on the tax laws that apply in the jurisdiction where the taxpayer resides. The text of the tax letter may provide only a broad description that effectively conveys to the taxpayer that any and all assets will be included in the seizure. In some jurisdictions, specific assets may be mentioned, along with a provision that allows the agency to add to that listing when and as other assets are identified.

It is not unusual for both state and national tax agencies to have the authority to take possession of assets when a taxpayer is delinquent and is not taking any steps to settle the debt. In the United States, the Internal Revenue Service has full authority to take this action under certain circumstances. Along with the IRS, many states that assess an income tax also have provisions within the tax laws to notify delinquent taxpayers that their assets will be seized in the near future. In either case, issuance of a formal notice of seizure is mandatory.

Just about any asset may be included under the terms of a notice of seizure. All forms of real estate currently held by the taxpayer are usually included. In addition, assets such as vehicles, jewelry and even personal collections are highly likely to be seized and sold at auction. In some cases, even personal effects like clothing may be included in the overall seizure. Essentially, any belonging that may generate some amount of cash that can be used to settle the debt is subject to seizure.

Fortunately, most tax agencies see issuing a notice of seizure as a last resort. This means that if the taxpayer is able to agree to some sort of repayment arrangement such as a monthly payment schedule with a minimum amount remitted each month, chances are that this type of activity will not take place. Most agencies have very specific regulations in what must take place before arrangements to seize property are executed, including the issuance of the notice of seizure so the taxpayer knows that to expect.