Body shop delinquent on their taxes, can the IRS seize my car?

[MikeAW2010]

Jurisdiction

Texas

My car is at a local body shop for major custom fiberglass work. He does very good work but he suffers from staffing issues and unable to find the help he needs to get jobs done sooner. Because his craftmanship was good I gave him alot of time to finish as its very hard to find a body shop locally thats willing to due custom work, most only want to do insurance claims and quick turn arounds. Well.. ..today I found out this body shop is deliquent on their taxes by about $100,000.00 ... which makes me nervous.

Can the IRS seize the shops assets and also my vehicle as well as other customer vehicles in the shop to satisfy the debt he owes?

 

[army judge]

Can the IRS seize the shops assets and also my vehicle as well as other customer vehicles in the shop to satisfy the debt he owes?

Can implies the ability to do something, as in anything.

I doubt the IRS, as difficult as that agency can behave, they're not scoff laws, nor would they even consider seizing the property of uninvolved with the business's innocent customers.

However, these days many once impossible deeds are becoming possible.

If it worries or vexes you, why not retrieve your vehicle for safekeeping while the owner gets his troubles rectified?

Once the issues have been resolved, take your vehicle back to your preferred body shop.

 

[adjusterjack]

I'd be more nervous about him defaulting on rent and getting locked out with your car locked in. You can bet the landlord will turn a blind eye to who owns what until you get a court order for the release of your car.

 

[Tax Counsel]

Can the IRS seize the shops assets and also my vehicle as well as other customer vehicles in the shop to satisfy the debt he owes?

IRS revenue officers are the ones who do the seizures of assets to collect delinquent taxes. (Revenue agents are the auditors that go out to businesses to examine the books and records.) I started my tax career as a revenue officer. What I'd have done in the situation of seizing the assets of an auto shop is go to the business, shut it down and seize everything at the business premises. The assets of the business are what I would slap tags on for sale later. The assets of customers I'd hold until the owners can come to the shop and show me proof of ownership. At that point if the customer owes money to the business, I'd prepare and hand to the owner a levy attaching the funds that the customer owes to the business. Then when the customer pays the bill he owes, I'd take the money for the government and release the asset to the owner. In short, the customers get their property back when they pay any amount owed, just as they would when dealing with the shop owner.

The main difference is that it may take the customers a little longer to get their items because the revenue officer isn't going to be sitting there all day every day for the customers to show up. What I'd do is set a few specific days and times for customers to pick up their assets and then contact them to tell them when they can pick their stuff up and what fees/bills they need to pay to get the property released back to them. While each revenue officer handles things a little bit differently, in general what I described is what you'd see in any seizure the IRS does.

The amount owed tells me the business likely owes the IRS employment taxes (the taxes the owner deducts from the employee's paycheck to hand over to the IRS). Businesses typically stop paying their employment taxes when they start having cash flow problems because they know the IRS won't take action immediately but their suppliers, employees,and the landlord will take action immediately when they aren't paid, so paying those bills becomes the priority in order to keep the doors open. The unfortunate thing is business owners tend to be overly optimistic and think the cash flow problems are only temporary. Rarely is that the case. Once a business starts having cash flow problems, debts start to pile up and even if business picks back up they end up so far behind they can't dig themselves out.

Even worse, they don't realize that they need to make the employment taxes their top priority. Failure to make the federal tax deposits (FTDs) on time and failure to file the returns on time result in multiple fines by the IRS that are very expensive. And the business cannot get the employment taxes discharged in bankruptcy like most other debts the business has. When I'd give talks to new business people about employment taxes, I'd tell them that if they don't have the money to make the FTDs then they should not make the payroll for that pay period because the penalties and interest will be huge, and I'd stress their personal liability and the fact that bankruptcy won't get of it. So the smart businesses would shut their doors once the cash started drying up. It might wound their pride to shut down because they take it as a failure, but financially it's the much better move.

Like the Kenny Roger's song "The Gambler" says: "You've got know when to home them, know when fold them, know when walk away, and when to run." The good business person knows not only when to get into a business, but also when it's time to get out.

 

[welkin]

Like the Kenny Roger's song "The Gambler" says: "You've got know when to home them, know when fold them, know when walk away, and when to run."

Darn that auto-correct. I just watched the Gambler on Starz Encore Westerns yesterday.

 

[adjusterjack]

"You've got know when to hold them, know when fold them, know when walk away, and when to run."

Was he talking about diapers? LOL.

 

[welkin]

Was he talking about diapers? LOL.

No, that was Jack Nicholson in the Bucket List.

 

[ldij46]

My car is at a local body shop for major custom fiberglass work. He does very good work but he suffers from staffing issues and unable to find the help he needs to get jobs done sooner. Because his craftmanship was good I gave him alot of time to finish as its very hard to find a body shop locally thats willing to due custom work, most only want to do insurance claims and quick turn arounds. Well.. ..today I found out this body shop is deliquent on their taxes by about $100,000.00 ... which makes me nervous.

Can the IRS seize the shops assets and also my vehicle as well as other customer vehicles in the shop to satisfy the debt he owes?

The answer to that is both a yes and a no. If they were to seize the business, they would lock the doors with everything in it on a temporary basis. It would then get sorted out as to who owns what. In the end they cannot and would not seize your property. However in the short term they could temporarily hold onto it until it was determined that it did not belong to the business.

In the case of a body shop, I suspect that would happen quite quickly, as the IRS would be well aware that nearly all of the vehicles present would belong to customers rather than to the business. However, they would want to make sure that the business got paid for any work done as they would be seizing that money.