What is Tax Taking?

Mary McMahon
Mary McMahon

Tax taking is the practice of seizing property and selling it to recover back taxes. Representatives of tax agencies have the legal authority to initiate tax taking when a taxpayer fails to get current on taxes after receiving a request to do so. It is possible to sell real estate, private property, and business property, usually at auction, to satisfy a tax debt. Authorities typically only pursue this measure when more conservative approaches to resolving the problem fail, as tax taking requires substantial administrative time and energy and can be an expensive proposition.

Failure to pay property taxes could result in losing ownership of real estate through tax taking.
Failure to pay property taxes could result in losing ownership of real estate through tax taking.

When people start to fall behind on income taxes, property taxes, and other kinds of taxes, the government usually sends a warning notice. The notice asks the person to pay his taxes and provides information about the estimated balance, including interest. The taxpayer may respond by paying in full, working out a payment plan, or disputing the claim. If the person fails to act, the government may send additional warning notices and can consider filing a lien, making it impossible for the taxpayer to legally sell or transfer property until the tax matter is resolved.

Tax authorities can decide to authorize tax taking because a taxpayer does not respond to requests for payment, fails to fulfill repayment obligations, or is clearly attempting to evade payments. Representatives of the government will request law enforcement assistance to seize the property, taking steps like changing locks and removing movable property to a secure location. The taxpayer may have a final opportunity to repay the taxes before the property goes to auction in a forced sale, with the government taking the funds to cover taxes, administrative fees, and interest.

In some regions, tax taking for real estate is a two-step process. The person actually buys the tax bill, paying it in full. If the taxpayer repays the bill, with interest, within a set period of time, the purchaser gets her money back, but if the taxpayer does not, the deed to the property transfers to the purchaser. This approach to tax taking provides people with investment opportunities, as they will either receive their money back with interest, or get the title to the property.

People facing tax taking proceedings should consult an attorney for assistance. Tax agencies are often willing to work with people as long as they communicate and provide evidence that they do intend to address the tax bill. Silence on the part of a taxpayer can speed the process of tax taking, as authorities may be concerned about attempts to evade payment and hide or destroy property to prevent a government seizure.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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