When you owe back taxes to the federal government, the Internal Revenue Service (IRS) can file a federal tax lien or serve a levy against your assets to satisfy the outstanding balance of your tax bill. States typically have a type of law called the homestead exemption that protects homeowners from the actions of creditors, and Florida has one of the most protective homestead exemptions in the United States. Since the IRS is an agent of the federal government, it is a special type of creditor and special rules apply where federal law and state laws coincide.
What is the Florida Homestead Law?
Florida law protects homeowners who are also permanent Florida residents from a seizure or forced sale of their home to satisfy creditors. Some states limit the amount that will be protected by a home, but under Florida law, the homestead protection is unlimited. Moreover, the law protects the proceeds from the sale of your Florida home provided you intend to establish another residence and remain in Florida.
Does Florida Law Let the IRS Take Your Home?
The IRS may file a federal tax lien or serve a levy against your home and force a sale to satisfy a federal tax debt. Because of the Supremacy Clause in the United States Constitution, federal laws preempt state law unless federal law explicitly provides otherwise. Accordingly, if you owe back taxes, the IRS can levy your home in Florida to satisfy your outstanding debt despite Florida’s protective homestead exemption.
IRS Collection Process
If you owe back taxes to the IRS, you should communicate with the IRS to negotiate a payment plan or to discuss why you are unable to pay your taxes in full. The IRS typically only levies property upon the occurrence of three things. First, the IRS has sent a Notice and Demand for Payment. Second, you did not respond to the Notice or you refused to pay the tax. Third, the IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days prior to the date of the levy. There are several ways for the IRS to release a levy, which includes you entering into an installment agreement with the IRS, furnishing an acceptable bond or extending the ten-year period for IRS collection.
Back Florida Taxes
Though the IRS is capable, but generally does not force a sale of your Florida home, the Florida homestead law contains an explicit exception for the state of Florida. If the state of Florida or a local government therein is one of your creditors, the state of Florida or local government may force a sale of your home to collect property taxes that are past due.
- Alper Law: Florida Asset Protection – Homestead Protection
- IRS.gov: Publication 594 (July 2007)
- United States Archives: United States Constitution (Article VI, Clause 2)
- Northwest Registered Agent. "Florida Declaration of Domicile." Accessed Oct. 31, 2020.
- YoGovernment. "How to Transfer Your Out of State License in Florida?" Accessed Oct. 31, 2020.
- Pinellas County Property Appraiser. "Save Our Homes." Accessed Oct. 31, 2020.
Kay Lee began freelance writing for Answerbag and eHow in 2010. She is an attorney in Washington, DC, practicing since 2006. Lee specializes in employee benefits and executive compensation. She holds a Juris Doctor from the Columbus School of Law and a Master of Laws from Georgetown University Law Center.