Question

It's important to have a good grasp of what is property that the IRS can go after when wanting to collect a tax debt. Sometimes this can cause debate. For example. the IRS takes the position that he sale of one's own blood is not the sale of property, but the performance of a service. Yet, when the blood bank sells that same blood to a hospital, then it is a sale of property. Thus, it would seem that the IRS cannot have a lien on my blood so long as it is in my body, because it is not "property" but it can have a lien on the same blood after I have sold it to a commercial blood bank.

What do you think? Are there other items that you think the IRS would consider property that you think are services, or vice versa? Also, is there property out there that you think should be exempt from being considered property that can be subject to an NFTL?

Answer 1

Part 5 Chapter 12 of the Internal Revenue Manual (IRM) of the IRS deals with the provision of lien on property in case of unpaid taxes. Legally, blood can only be donated not sold to a blood bank and hence blood is not considered as a property or asset of the donor. The act of donating blood though, may be compensated for by a blood bank in the form of some small amount and hence is considered as a service. Once the blood bank acquires the blood then it becomes property of the blood bank as it is stored and therefore the IRS acquires a lien on it. The difference lies in the fact that blood stored in a blood bank is not flowing through the veins of a living individual. Putting a lien on blood flowing through the veins of an individual means that in situation of exercising that lien there can be threat to the life of the individual from whom the blood is being extracted. Therefore ethically speaking also, this is wrong. But in case of blood bank there is no immediate threat to life if blood stored in blood bank is taken as lien in lieu of unpaid taxes by the IRS.