Can the IRS Seize My Car?

You may have heard about the IRS seizing a taxpayers assets for unpaid taxes. These can include, among other things, the vehicles that they own. So the short answer to the question is yes, the IRS can seize a taxpayers vehicle. But let’s discuss the mechanics of how it gets to this point and some other important items shall we?

Why does the IRS seize vehicles? The first thing to know is that if you owe the IRS under $5000, your assets may not necessarily be seized and sold off. Per the 2019 IRS Data Book, in 2018 and 2019 the IRS seized a total of 275 and 228 assets respectively. Also, if you lease property, then you aren’t the legal owner. The IRS can’t seize items you don’t own, unless you have built up equity, or an ownership interest, in a leased asset. For most items, such as a rented auto, you won’t have any equity or it will be too small for the IRS to consider.

In the instances above, the IRS will seek to satisfy the collection of the debt owed through other means. This could include garnishing your income or seizing your federal tax refund. Now if the debt is substantial, then that’s where vehicle seizure comes into play.

The IRS utilizes progressively serious methods to try to collect your tax debt before seizing your vehicle. It will begin by informing you of your tax debt and giving you the opportunity to pay it. When they have sent numerous notices and attempted to collect, but have been unable to or can’t communicate with you regarding a reasonable plan for repaying your debt, it will proceed to file a federal tax lien against you.  The Notice of Federal Tax Lien will alert creditors that the government has a legal right to your property.

Once other methods of collection have been exhausted, the IRS will use its power to seize assets by use of a levy. An IRS levy permits the legal seizure of your property to satisfy a tax debt.

How does the IRS seize a vehicle? A typical IRS seizure usually goes as follows:

  • Local law enforcement accompanies IRS Revenue Officers so they are not interfered with nor attacked.
  • The Revenue Officers will present their credentials to the taxpayer as well as the order (typically from a judge) that states they have a right to take the property.
  • The IRS contractors (e.g. towing companies) will then secure the asset and remove it from the property for storage at a IRS facility.

We scoured the internet for a video showing an actual IRS vehicle seizure in process. This very dated video is all we could come up with. Regardless of how old it is, note how high the tension is!

Despite the video’s title stating that the IRS is violating someones rights, this is actually lawful

What does the IRS do with the seized vehicles? The first thing that happens is that the vehicle gets moved to a storage facility. Next, the taxpayer is usually given one last attempt to settle the debt and reclaim the asset. But simultaneously, the IRS post public notice that the item is available for purchase from the US Government.

Generally speaking, the vehicle will be sold off relatively quickly, usually at an auction that is open to the public. The money raised from the sale is then applied to the tax debt that you owe to the IRS. The goal of seizing assets is to satisfy the debt as quickly as possible since you failed to pay it off yourself. 

The image below shows seized vehicles by the IRS and how they notify the public of an auction. Anyone want to purchase a 2018 Ferrari??

How to avoid seizure. The best way to avoid having your assets seized is to file your taxes and pay what you owe on time each year. However, if you cannot fulfill either of these obligations, you should communicate with the IRS and be honest about your financial situation. 

You could be eligible for a payment arrangement, which would allow you to pay off your debt in monthly payments. The arrangement will take into consideration: 

  • How much money you make
  • Your household size
  • How much you pay in rent, utilities, and other basic expenses
  • The total value of your assets

The IRS will then determine a monthly amount that you should be able to pay toward your debt.  In extraordinary situations, your tax debt could be forgiven. Forgiving a tax debt is a rare occurrence. However, it could be possible if you experience hardships like: 

  • High medical costs
  • Divorce
  • Death of an immediate family member
  • Terminal illness
  • Job loss
  • Slowing down of your business

How a Virtual Assistant Can Help You Survive Covid-19

In early 2020, the Covid-19 pandemic forced many businesses to alter their operations. At best, this meant converting brick and mortar offerings into virtual options. At worst, it meant shutting down until stay-at-home orders were lifted. But now that restrictions are being lifted, some are still finding it hard to get back to “normal” so to speak. Well, an option that might help one achieve that normal could be a virtual assistant.

What is a virtual assistant?

A virtual assistant (VA), as the name implies, is an assistant that helps and supports your business virtually. This does not mean that the person is a robot or some type of computer. It simply means that the person is based at a remote location and not within your office. A VA is trained to assist you, and your business, when called upon.

Advancements in technology, the presence of the internet, along with document-sharing and other business-related software, makes it easier for people to work remotely. Because many businesses no longer “need” people to physically be present at the same location for them to work, VAs could be a good option for some.

What services does a VA offer?

Depending what needs your business has, a VA can assist with almost any and every work-related task. Some of the most common tasks that a business will allocate to a VA include:

  • Operational and administrative tasks
  • Phone management
  • Event management
  • Managing calendars, appointments and emails
  • Preparing reports
  • Personal tasks like booking hotels and restaurants
  • Social media management
  • Content management
  • Simple digital marketing tasks
  • Community management
  • Website design

Take one of our clients for example. Edmond Virtual Assistant Services offers VA services here in the greater Chicagoland area. Their offerings are centered around four areas/groupings:

  • Executive Support
  • Productivity
  • Marketing & Social Media
  • Special Services

In addition to the above, companies can hire role-specific VAs to handle specialized duties as well. In these scenarios, VAs have a specific skill set that only allows them to tackle just one operational area. For example, the person could only work on tasks associated with sales and marketing, public relations, or customer service.

How can a VA help you survive Covid-19?

Many businesses have had to try and retool their operations in the wake of Covid-19. If you’ve had to close your brick-and-mortar location, but still have the ability to sell your goods virtually, a VA could be a key addition. Even if you are still operating a physical location offering something like curbside pickup, a VA could function remotely to help take customer calls, schedule pickups and coordinate orders. With that said, here are some additional ways that a VA might be able to help you weather this storm.

Reduce operational costs. Since VAs work on their own from a remote location, businesses can save money related to their own location and equipment costs. Furthermore, since the concept of a VA states that the person would be providing their services on a contract basis, VAs have an unsaid understanding with companies to not expect payment unless they are actually working or producing deliverables. 

Access to needed skills. One of the foremost reasons why small businesses and solopreneurs hire VAs is to get easy access to skills and expertise, which otherwise would either be too costly to hire for or too time-consuming to do by ones self. Remember, most entrepreneurs are good at what they trained or went to school for. Administrative tasks don’t always fall within their wheelhouse.

Imagine you’re an entrepreneur running a small restaurant that only offered in-person dining pre-Covid-19. Now you are going to offer carry-out as well as curbside pickup, but you don’t have the technology structure in place to make that happen quickly nor seamlessly.

While you can choose to do so by going the long route of hiring a person or technology firm, the option of hiring a hit-the-ground-running “tech” VA could be the more beneficial route. This enables you to quickly get things in place in no time in a much more cost-effective manner.

Maintain Quality service. The simplest reason for most companies to hire VA is to have efficient business operations in place. Hiring a VA enables businesses to employ reasonable resources to fulfill tasks that internal employees either don’t have the time for or aren’t qualified enough to tackle.

Let’s say that your business has had to reduce staff levels to try and survive financially. You’re operating with a limited skeleton crew or worse, you simply had to let people go. Some of those people, might have been really talented workers or those with years of expertise. Now your stuck trying to “limp along” until things get better. This might even mean the business owner doing things they don’t really know how to, nor want to do. Furthermore, they could find themselves simply doing too much, which leads to increased production times, order fulfillment or decreased customer satisfaction.

Having a VA in place to assist with some of the mission critical operations at this time could be just what is needed.

Decreasing the owners workload. Have you found yourself in a situation lately where you missed your kid’s activity (e.g. school e-learning Zoom) because you were either too busy handling “things” or because “something came up” at work?

Saving time and decreasing your workload go hand-in-hand when it comes to outlining the benefits of hiring a VA. Having a VA who can handle those “things” or tackle that “something at work” can help you find more time and therefore reduce your increased workload.

Time management. Hiring VAs empowers businesses to utilize their time more efficiently. For example, would you rather waste four hours a day doing tasks like cleaning out your inbox or spend those four hours conceptualizing innovative strategies to help your business survive?

That’s a no-brainer, right? Having a VA working for you to handle such tasks that could potentially eat up your time, helps you regain lost time that you can invest in working  on your business rather than in it.

Promote your ability to service customers during Covid-19. There are many businesses that are NOT open for “business as usual” as a result of this pandemic. Getting a VA on board can help a business focus on multiple advertising tasks at the same time to let customers know that you ARE open and ready to accept customers business.

This may include promoting availability on social media, running online campaigns, or submitting stories to newspapers. Having someone dedicated to keeping consumers up to date on a businesses’ sometimes “ever changing” Covid-19 operations, could just be the difference between staying open in the long run or turning out the lights for good!

Real Estate Agent Tax Deductions

The key to paying less in taxes is ensuring no deduction is missed!

Maximizing your tax deductions as a real estate broker or agent is not solely about finding things to deduct. While that is a large part of it, also involved is being knowledgeable about what is deductible AND then tracking said deductions. I mean, if you fail to track what you can deduct, then how can you actually deduct it? Sure, you can estimate or even make it up. But guess what? That is a sure-fire way to have the IRS disallow the expense if they decide to audit your return.

To ensure that you don’t miss any business related expenses paid for during the tax year, it’s recommended that one use a tax organizer. Feel free to use our handy dandy tax organizer (checklist) as a starting point.

From there, make sure that you aren’t forgetting any of the expenses typically deducted by those in your profession. What are those? While this list is not entirely inclusive or comprehensive, it does cover most of the major items:

Advertising

  • Billboards
  • Brochures/Flyers
  • Business Cards
  • Copy Editor Fees
  • Direct Mail
  • Email Marketing and Newsletters
  • Internet Ads (Google, Facebook, etc.)
  • Leads/Mailing Lists
  • Post Cards
  • Print Ads (Newspapers and Magazines)
  • Promotional Materials
  • Signage/Banners
  • Web Hosting and Domain Fees

Auto Expenses

  • Car Washes
  • Gas
  • Insurance
  • Interest
  • License/Registration
  • Maintenance
  • Repairs
  • Tires

Business Travel

  • Airfare
  • Car Rental
  • Lodging
  • Meals
  • Parking/Tolls
  • Taxi, Train, Subway, Bus

Communication

  • Answering Services
  • Cell Phone Service
  • Fax Expenses/eFax
  • Internet Service
  • Office Telephone/VOIP

Equipment

  • Camera/Lenses
  • Cellphone/Smartphone
  • Cleaning Equipment
  • Computer
  • Hard Drives/Thumb Drives
  • iPad/Tablet PC/Android
  • Laptop
  • Lock Boxes/Locksmiths/Keys
  • Printer
  • Scanner

Employee Wages

  • Clerical Support
  • Family Wages (e.g. kids/spouses)
  • Payroll/Unemployment Taxes
  • Sales Assistant
  • Virtual Assistant

Office Expenses

  • Desk Fees
  • Client Refreshments (Coffee, Water, etc.)
  • Copier Fees
  • Janitorial Services
  • Office Furniture
  • Office Supplies
  • Office Rent
  • Online Storage of Business Files
  • Software

Professional Fees

  • Association Dues/Fees
  • Chamber of Commerce
  • Bookkeeping Fees
  • Business Licenses
  • E & O Insurance
  • Franchise/Affiliation Fees
  • Legal Fees
  • MLS Fees
  • Tax Prep Fees

Retirement

  • Defined Benefit Plan
  • Simplified Employee Pension (SEP)
  • Simple IRA
  • Solo 401k

Training & Improvement

  • Books (Sales Books, Real Estate Books, etc.)
  • Continuing Education
  • Newsletter Subscriptions
  • Sales Training/Coaching
  • Seminars

Looking for more ways to save on taxes?

Jared’s latest book, The Real Estate Brokers Little Black Tax Book is chock full of tips and strategies to help you cut your tax bill. Sure, you can buy it by clicking the book image at the top of this page, BUT, if you head over to this super secret page, you can get some free goodies. Like see a video where Jared discusses the book and get the free white paper, The 10 Tax Issues Broker Face. So what are you waiting for? The sooner you take action, the sooner you can keep more of your hard earned commissions in YOUR pocket and out of the hands of Uncle Sam!