Is everything I own fair game for the IRS to take in a collection case?
Tax laws prevent the IRS from taking your furniture and household goods up to $7,040 in value. Tools that are necessary for your profession are protected from the IRS up to $3,520 in value. Clothing for you and your family is also protected. These “exemptions” are in Section 6334 of the tax code.
The IRS cannot take your unemployment benefits, workmen’s compensation, court-ordered child support and supplemental social security benefits.
The IRS will also not take property that, if sold, would not result in any payment to it. For example, if your car is worth $4,500 and you owe $5,000 on it, the IRS cannot take it since the sale would not result in any recovery to the government. This is known as the “no equity” rule from Section 6331(f) of the tax code.
In addition to the no equity rule, the IRS cannot take your home if you owe under $5,000.
