You might have received some communication about being arrested by the Internal Revenue Service, or the upcoming threat of an arrest, for failure to pay your taxes. If this is the case, odds are that this should not be a surprise to you if you’ve disregarded previous IRS communications. If this is a surprise, then it might be something completely different.
This article will walk through the details about IRS procedures, when IRS agents might be involved in an arrest, and scams related to this topic. Before we do, I must submit this disclaimer.
This article was written by someone who is not a lawyer, and does not intend to give legal advice in any capacity. The research behind this article was performed entirely on the Internet, using resources deemed to be reliable at the time.
Where possible, the citation for the specific law or regulation is given, but not interpreted.
Where appropriate, full credit is given to the source. This article is written for educational purposes only. Should you actually need to speak to a person about the criminal liability of your tax situation, I highly recommend you speak with a tax attorney.
Disclaimer out of the way. Let’s start with the question that got us here.
Can the IRS issue an arrest warrant?
Technically, arrest warrants are issued by judges, based upon a request from a law enforcement agency. So in the strictest sense, the IRS doesn’t issue arrest warrants, since they are a federal government agency, not a court.
According to the Legal Information Institute, arrest warrants “serve the purpose of protecting people from unlawful arrests and unreasonable searches under the Fourth Amendment.” In other words, a law enforcement entity, like the Department of Justice, needs to show probable cause to a judge or magistrate in order to obtain an arrest warrant or a search warrant.
However, there are some nuances we should explore here.
Can the IRS arrest people with a warrant?
Yes, the IRS can arrest people with a warrant, or without a warrant. The Internal Revenue Manual, Part 9, Chapter 4, Section 12 extensively covers arrests. Specifically, this section covers:
- Authority for IRS agents to arrest
- Securing arrest warrants
- Arresting procedures
- Processing of arrested individuals
With that said, not just any IRS employee can arrest people. And they can only arrest people in special situations.
Which IRS employees can arrest people?
The IRS has a criminal investigation division (known as IRS-CI) that investigates criminal violations of the Internal Revenue Code. Within IRS-CI, there are federal law enforcement officers, known as special agents, who are granted statutory authority to make arrests.
According to 26 USC §7608, special agents have the statutory authority to:
- Execute and serve search warrants and arrest warrants, and serve subpoenas and summonses issued under authority of the United States
- Make arrests without warrant for any offense against the United States relating to
- The Internal Revenue laws committed in their presence, or
- For any felony cognizable under such laws if they have reasonable grounds to believe that the person to be arrested has committed or is committing any such felony
- Make seizures of property subject to forfeiture under the Internal Revenue laws
Even though IRS special agents have the statutory authority to make arrests, the Internal Revenue Manual goes to great lengths to explain that arrests are only for criminal offenses. That said, special agents have the authority to make arrests with a warrant or without a warrant?
Does an IRS special agent need a warrant to make an arrest?
No. Special agents have the statutory authority to make arrests with or without a warrant. However, the Internal Revenue Manual recognizes the increased risk of civil liability in the case of arrests without a warrant. As a result, in IRM 126.96.36.199.1.1, there are restrictions on a special agent’s ability to arrest without a warrant:
- An arrest without a warrant is a serious matter and could subject the special agent(s) to civil liability. Therefore, in order for a special agent to make a warrantless arrest, a felony must have been committed in the agent’s presence or the agent must reasonably believe the person arrested committed a felony.
In other words, the arresting officer must have probable cause, or have personally witnessed the crime in order to make the arrest.
Furthermore, the IRM recommends that in cases of a warrantless arrest, that the supervisory special agent coordinate with the Department of Justice attorneys to avoid making an arrest where prosecution or bringing criminal charges is not authorized.
Although many arrests are conducted in criminal cases that are related to taxes, most people reading this article are probably wondering about how arrests play in the role of collecting unpaid taxes.
To better understand this, let’s take a brief look at the IRS tax collections process
IRS tax collections process
IRS Publication 594-The IRS Collection Process, covers the entire tax collections process in full detail. It is an 8-page document that you can find on the IRS website. Here is a brief overview of how the IRS collects taxes.
Tax return filing
Most people are familiar with their individual tax return. They might assume that whatever is reported on the tax return is the only way the IRS knows about their taxable income. That’s not true.
What many people don’t realize is that the IRS receives taxpayer information from multiple sources. For example, if you received a Form 1099-MISC from your property manager who is managing a rental property, the IRS receives a copy of that same form. This happens for virtually all sources of income.
Your tax return actually is a reconciliation of this information that you send to the IRS. And it serves to show that you’ve taken the time to calculate your tax liability so you can pay it.
If you’ve overpaid your taxes throughout the year, and it’s reflected in your federal income tax return, you’ll receive a tax refund. If you owe money, you’re supposed to pay the unpaid taxes, as well as any penalties, when you file your tax return.
But sometimes, you might make a mistake. There might be unreported income because you forgot to include a form. Or there might be an administrative error.
In that case, the IRS will calculate your tax liability and send you a tax bill.
IRS sends you a bill for unpaid taxes
Publication 594 advises a taxpayer that there are 4 things a taxpayer can do if they receive a tax bill. The tax bill simply will probably be the tax bill that you already reported on your tax bill with any IRS adjustments as well as additional penalties and interest.
If you agree with the bill, pay it as soon as possible.
Paying the tax bill as soon as possible reduces the amount of penalties and interest you owe on your back taxes. You may be able to request penalty abatement from the IRS, but you have to have paid your outstanding tax liability before the IRS will consider it.
If you disagree with the bill, notify the IRS.
You can go to your local IRS office or contact the phone number on your tax bill. If you visit the IRS in person, be sure to bring all records you feel might pertain to your taxes. This might include:
- Bank statements
- Tax returns
- Canceled checks
- Financial records or other documents that might support your case
Perhaps you agree with the bill, but you feel like you can’t afford to pay off your tax debt. In that case, you should still contact the IRS.
If you are in bankruptcy, or need to work out a payment plan, contact the IRS.
If you are in bankruptcy, your tax debt likely will not get discharged. However, there are things that the IRS can do to stop the collections process.
If you need to work out a payment plan, the IRS can help you fill out the necessary forms and help you determine a payment plan.
You may qualify for an installment plan, where you pay off your taxes in monthly payments. You’ll need to submit a written request or apply for the installment plan on the IRS website.
If you feel you cannot pay off your tax debt, you can request an offer in compromise (OIC). An OIC is when the IRS agrees to accept less than what you owe, in order to release you from your tax debt.
There are many tax attorneys and specialists who help people with OICs. You should be forewarned of a couple of things:
- The IRS will demand a LOT of personal information from you. They will ask for a lot of your personal data to evaluate whether you’re truly not capable of making payments. This information is requested on Form 433-A, Collection Information Statement.
- You will be held responsible for any false statements that you make on the Form 433.
- The IRS reserves the right to share any information submitted on the form, including your Social Security Number, with the Department of Justice for any criminal penalties or legal action.
- An OIC may impact your credit rating and may appear in a credit report.
If you do nothing, then the IRS will start taking collection action to pay down your taxes.
Collection actions the IRS can take
If you choose to disregard the bill that the IRS sends, then the IRS will start taking collections action to reduce your tax debt. The IRS does this through federal tax liens and tax levies.
Federal tax lien
A federal tax lien is a legal claim to your property. It serves as a public notice to other creditors that the federal government has a claim to your property.
A federal tax lien can be attached to your house, banking accounts or personal property. A tax lien will almost definitely have a negative impact on your credit score.
As with all collections actions, you can appeal your tax lien. An appeal will ensure a closer look to see if any mistakes were made.
A tax lien may be satisfied if:
- The lien is paid in full, with penalties and interest, or
- Payment of your debt is guaranteed by a bond, or
- You have met the payment terms of an OIC that the IRS has accepted, or
- The collections period has ended
If the lien is not satisfied, and the taxpayer has not started making payments, the IRS may start seizing property.
Federal tax levy
A federal tax levy is when the IRS starts seizing assets to pay down your tax liability. The IRS may seize (levy) the following:
- Wages, commissions, or other compensation
- Bank accounts
- Retirement accounts
- Investment accounts
- Certain federal payments
- Real estate (including your house)
- Personal property (like your car or furniture)
The IRS cannot seize certain property or sources of income. This includes:
- Unemployment compensation
- Certain annuity and pension benefits
- Certain service-connected disability payments
- Worker’s compensation
- Certain public assistance payments
- Minimum weekly exempt income
- Income for court-ordered child support payments
- Assistance under the Job Training Partnership Act
Most of the time, threats of arrest to an unsuspecting taxpayer are signs of a scam.
Scams involving threats of arrest
The IRS may contact people with regards to an audit. However, the IRS will primarily (as a first resort) contact people by mail. Only after unsuccessful attempts to contact people by mail, will an IRS office attempt to call the taxpayer.
The IRS does not send emails, and the IRS never sends text messages. These are huge red flags.
And let’s be honest. If you’re receiving threats of being arrested over your tax bill, one of two things is happening:
- You knowingly committed some form of tax fraud, or a crime with tax implications, or
- The person contacting you is trying to scam you.
Either way, you should either completely disregard, or hire a tax attorney.
What should you do if you think you might be arrested for tax-related crimes?
Immediately, you should contact a tax attorney to see if you need legal representation. Even in tax matters, only authorized legal counsel can protect taxpayers with attorney-client privilege.
No accountant or tax professional, besides an attorney, can offer this protection. And only attorneys can give legal advice.
Commonly asked questions
Here are some commonly asked questions about the IRS and arrest warrants.
Can you go to jail for not paying taxes?
You cannot go to jail for not paying taxes. However, the IRS has a thorough and rigorous collections process designed to ensure that anyone who has the capability to pay their taxes does so.
This process also allows for people without the financial resources, or who would otherwise experience an economic hardship to seek relief by presenting their facts.
Finally, there is an appeals process through the courts system. This includes tax courts, as well as the traditional courts process, all the way to the Supreme Court.
What happens if you don’t pay the IRS?
The IRS can, and will, start a comprehensive collections process to ensure your tax liability is paid in full. This can include placing federal tax liens on your property, or seizing these assets if the tax liability remains unpaid.
How much do you have to owe the IRS to go to jail?
You cannot go to jail simply for owing the IRS money. However, the IRS can conduct investigations into your background. If, during these investigations, you are suspected of committing crimes, you may be prosecuted and sentenced to serve time in jail for those crimes.
Can the IRS make you homeless?
The IRS has the ability to place tax liens on your house, and even has the ability to seize (levy) your house. However, recognizing that a homeless taxpayer is less likely to pay their back taxes, the IRS often tries to find ways of resolving your tax debt without making you homeless.
Can the IRS take my house?
Yes. See the section under federal tax levy.
Can my IRS auditor arrest me?
Your auditor cannot arrest you. However, if you are the subject of a criminal investigation, you may be approached by IRS special agents, who do have the authority to arrest people. To make an arrest, a special agent must have an arrest warrant issued by a judge, or a very high degree of certainty that they witnessed a crime.