Can the IRS Collect on Foreign Assets? How to Know If Your Assets Are at Risk

IRS collection efforts can often be surprisingly aggressive, with the agency frequently going after assets you assumed were out of reach. Often, taxpayers with assets held overseas are shocked to discover that these resources are just as vulnerable as those kept in the US.

If you assumed that your property was safe from IRS activity, think again. Still, it might not be too late to keep the IRS off your back. Keep reading to learn more.

Overseas Assets Are Not Safe

A recent memorandum from the Office of Chief Counsel Internal Revenue Service confirms that the IRS has the ability to collect funds from taxpayer accounts held overseas. The memorandum confirms that the IRS needs to have first exhausted domestic resources — and that the agency “must provide specific types of notice depending upon whether the taxpayer is located within or without the jurisdiction of the United States at the time of levy.”

Similarly, it’s relatively easy for the IRS to go after assets in foreign banks that happen to be located on US soil. Specifically, the aforementioned memorandum states, “We are not aware of any restriction that would prevent the IRS from issuing a levy to a domestic branch of a foreign bank in conjunction with any other collection action.”

Protecting Foreign Assets

As we’ve mentioned, the reality that the IRS can go after foreign assets shouldn’t necessarily be cause for alarm. Yes, the agency can seek these assets, but this will generally be a last resort. Before attempting to collect, the agency must provide notice. As such, there should be time to get your affairs in order if you’re worried about aggressive action.

Still, it’s wise to proceed with caution. The IRS is authorized to share your tax details with a variety of federal agencies and foreign governments, not to mention third parties such as banks or employers. As such, it’s important to seek support from an enrolled agent as soon as you suspect collection activity is in your future.

If you’re dealing with complex IRS issues, don’t hesitate to seek guidance from our team at the Highland Tax Group. We are happy to help, no matter how hopeless your tax situation seems. Reach out today to learn more.