Tax obligations can result in serious consequences. Businesses that fall behind in tax obligations can face more than stiff penalties from state and federal agencies, they could face loss of property.

How could I lose my property? Depending on the details of the tax obligations, the government could legally seize your property.

How common are property seizures? Unfortunately, this rather extreme government action is not uncommon. A recent publication by the CPA Practice Advisor noted five separate, recent examples. One example discussed in the piece involved government seizure of a two-store pizza chain due to an alleged failure to pay sales and occupational taxes. Another example, a café the government accused of neglecting sales tax obligations and yet another a restaurant that allegedly failed to pay sales taxes.

What if I have tax debt? Taxpayers with tax labilities have options. Examples include installment payment agreements or a request to classify the debt as uncollectible. Taxpayers must meet specific criteria and properly apply to have either option accepted by the government.

What if my property is seized? The Internal Revenue Service (IRS) generally sells seized property in an attempt to recoup money by applying proceeds of the sale to the property owner’s tax debt.

In some cases, the taxpayer can avoid this by negotiating with the government before it sells the property. In others, the taxpayer could successfully argue the seizure has resulted in an immediate economic hardship. If these options are unsuccessful, the taxpayer can appeal the government’s decision to seize the property. If successful and property is returned, the taxpayer will need to work out a deal with the government to cover the taxes owed.