The IRS can seize your residence, sell it, and apply the proceeds to outstanding tax liabilities. While the IRS may be reluctant to “put taxpayers out on the street” due to bad publicity, additional administrative requirements, including judicial approval, and the burdens of conducting a sale, the IRS can and will seize a residence in appropriate circumstances.

Additional considerations arise where the house is jointly owned and only one spouse owes taxes (non-liable spouse). The IRS can still seize the residence, but will typically pay half of the equity realized after paying off secured creditors to the non-liable spouse.