IRS Liens go Un-noticed

Aug 06, 2010   
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The IRS has begun to automatically issue tax liens to taxpayers with more than $5,000 in “currently not collectable” debt, regardless of their circumstance. This policy led to 966,000 tax liens issued in the 2009 fiscal year; an increase from 1999, where the IRS issued only 168,000 liens. A lien attaches to all of an individuals property including car, home, real estate accounts, and even accounts receivable if the tax payer is a business. The IRS additionally places interest in unpaid tax ahead of future creditors. In her 2009 annual report to Congress, National Taxpayer Advocate Nina Olson expressed her concern, stating that the IRS rarely uses its authority to “withdraw” liens from a taxpayers record. Olson believes that automatic filings may destroy a taxpayers credit score, business and job prospects, thus reducing an individuals ability to repay the government.

In a report titled “Actions Are Needed to Protect Taxpayers Rights During the Lien Due Process” issued on July 9, 2010, Treasury Inspector General for Tax Administration, J.Russell George, expressed his concern over the IRSs recent failure to notify taxpayers or their representatives when a lien has been issued.

The IRS is required to notify taxpayers and their authorized representatives within five days of a lien filing at their last known address.  Yet, the report estimates that in the 12 months ending June 30, 2009, the IRS failed to send notices to taxpayer representatives in 60,675 cases (26% of cases where a representative was on file). In addition, the report estimates that within the above timeframe, 2% of lien notices were mailed late to the taxpayers themselves. Further, the Report indicates that IRS employees failed to perform a required search for a lienees correct address in 84% of 300 cases where the original lien notice was undeliverable. This may have serious implications, because taxpayers only have 30 days to appeal a lien with the IRS; thereafter, a lien may only be contested in the Tax Court.

The IRS believes only 1% of notices have not been sent out on time, but is reconsidering what procedures are needed to deal with undeliverable notices. Officials say that the IRS is working on lien issuance timelines and agree it is, “imperative for both legal and taxpayer rights purposes to timely issue lien notices.” 

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If you have been issued a Notice of Federal Tax Lien or a Notice of Intent to Levy, our attorneys at Fuerst Ittleman, PL can help “ you may contact our attorneys at