The government may seize not only the account funds of a tax debtor held by a financial institution, but also the contents of a safe deposit box maintained at the bank. In a recent case, the state taxing agency seized the contents of a box which contained numerous pieces of jewelry, titles to automobiles and even foreign currency which were held collectively by family members and possible debtors to the state. The state suggested the taxpayers essentially buy back the assets they wished to retain based on the fair market value as determined by the government’s appraiser. The taxpayers questioned whether a tax liability was owed and did not believe any liability should be satisfied by the tangible assets held in the safe deposit box, the purpose of which was to protect and preserve family heirlooms.
The government can, and does, satisfy tax debt with tangible personal property. A notice of levy will first be served on an officer of the financial institution and a request will be made for a surrender of the contents of the box. The financial institution will be advised not to allow the box to be opened by the box holder unless the government representative is present. If the box holder does not consent to the government’s inspection of the box contents, a court order will be required before the taxing agency may proceed. Once the box is opened, the contents will be documented and in some cases appraised.
Additionally, in the case of a rental period of the safe deposit box having expired without renewal, the IRS’ Internal Revenue Manual instructs the revenue officer to attempt to determine if the bank or trust company has the power then to open the box, and if so, the revenue officer should try to take advantage of the opportunity to seize the contents of the box.