A federal tax lien is created on past due tax cases where taxpayers received a notice demanding payment of back taxes that has remained unpaid. The IRS then files a Notice of Federal Tax Lien to try to recover money from taxpayers who owe delinquent taxes. These lien notices placed on taxpayers’ property are supposed to be solely for collecting past due tax bills, and there are strict procedures the IRS must follow to create these tax liens.

The IRS must provide written notification to the affected taxpayers within five business days of the lien filings. However the TIGTA audit found that the IRS has not always complied with this legal requirement and occasionally fails to follow its own internal guidelines for filing timely taxpayer notifications of their lien.

The TIGTA report reviewed a sampling of 125 federal tax liens and found that:

• The IRS mailed two lien notices late, which is in violation of taxpayer rights.
• Over 15,000 lien notices filed during the same period could have been mailed late.
• The IRS failed to follow its internal regulations for notifying taxpayers’ representatives, such as their tax attorney, of the lien filing (8 cases).
• Over 60,000 taxpayer representatives may not have been provided lien notices

Based on these findings, the IRS does not have an adequate automated process to updates taxpayer representatives directly using their system that generates the tax lien notices.

The internal processes of the IRS have an organizational problem and this has affected taxpayers. Individual rights to appeal the tax lien filings have been jeopardized, and citizens had their rights violated when the IRS did not file proper notices of the lien filings.

We hope that this report causes the IRS to identify any actions necessary to correct the potential taxpayer violations for the untimely lien notices and fix any problems with the notification process. In addition, we also hope that the IRS audits other internal systems to ensure that taxpayers are all being treated equally.

Read the full report of the Treasury Inspector General for Tax Administration.

Note the disclaimer on the above pdf document created by TIGTA:

This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.

It make you wonder what information wasn’t fit for public consumption, and if there were more egregious violations that TIGTA didn’t catch while assessing IRS tax penalties on US citizens.

Until next time,

Jeff Fouts, Tax Attorney

Here’s a bio of sorts. I’m happily married with two kids. I’m a real small town tax lawyer, (Ellijay, pop. 1,584) not some fictional marketing character. I’ve represented tax clients against the IRS in all 50 states, and in 21 foreign countries. I have 18 years experience, thousands of satisfied clients, about 8 critics at last count, and an A+ BBB Rating.

I’m a member in good standing of the bar and have active memberships in courts from Georgia to Washington D.C., including the U.S. Supreme Court. My competitors covet my Google ranking but my clients covet my sound legal counsel. I deal directly with my clients and have a small, tireless staff of tax specialists.

You can put off your tax problem, or put us to work for you.

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1. Is the IRS easing up on tax liens? No.

Some good folks believe that the IRS may be unconstitutional. But it doesn’t matter that they may be incorrect in their views. They’re convinced they are right and it is very difficult to convince them to the contrary.

Even Idaho’s Republican lawmaker Phil Hart believes the IRS is unconstitutional. As a result, he stopped paying his taxes to protest the IRS. Not surprisingly, the IRS wasn’t convinced by his position and they slapped a $300,000 tax lien on him. One would hope that an elected US government official would choose a different method to express his feelings than stop paying taxes, increasing the tax burden on his constituents.

Apparently Mr. Hart felt that it was alright for the people who elected him to pay his salary, benefits and social programs and he should not contribute. (Read the article at KHQ.com)

What’s the lesson here? Taxpayers are free to believe that the IRS and the current system of taxation is unconstitutional, but believing that doesn’t make the IRS go away. The best way to change a system is to work to change the system using legal means, not by breaking the law, or causing the government to come after you.

It doesn’t help you, or change the tax laws, if you damage your financial life by having the IRS come collecting.

If you owe back taxes, you should strongly consider dealing with the IRS – sooner rather than later.

[Image source: Phil Hart Constitutional Income Book]

No related posts.

The IRS can legally file tax liens any time a taxpayer owes money and has not fully paid it off. There are usually only limited circumstances when the IRS won’t file tax liens, including when the tax debt is for a small amount, or perhaps when the tax liability is for a deceased person who died without any assets, or when the taxpayer is in an active bankruptcy.

In the old days, the IRS would often not file a tax lien, but today, with the federal government needing revenue so badly, IRS collection folks are much more likely to file a tax lien and to to file it faster.

Of course this makes sense for the IRS: If someone owes tax money the IRS wants paid, and filing a tax lien is a a way to put pressure on the taxpayer. A tax lien also helps the IRS protect their position and increasing the odds that they will eventually get paid. Nowadays they try to file the lien as soon as they are legally allowed to do so.

We all know the IRS is a very large bureaucracy, and they make mistakes all the time, so it wasn’t a great surprise that when the IRS recently “audited” themselves that they discovered there were 210 files at two field offices that never had any contact or follow-up and accounted for a potential $6.4 million in collectible taxes. Basically, 210 files were just sitting there, being ignored. In addition to that, tax officers closed over 2,700 files and called them “uncollectable” but never gave a reason. In total, between 2002 and 2008, it was discovered that $1.4 billion in delinquent taxes were shelved rather than followed up on.

Are they getting lazy at the IRS offices? How are IRS officers deciding which files to pursue and which ones to ignore? How can we as taxpayers ever know if we are receiving fair treatment if we are hit with a tax lien while someone else who gets shelved?

The most likely answer is that there are so many “taxpayers” who are delinquent in paying their taxes or in filing their tax returns that the IRS doesn’t have the resources to deal with them all.

The IRS hasn’t gotten soft, in fact they’ve gotten much more aggressive, and busier. If you owe back taxes, you should still sleep with one eye open because the tax man will eventually come looking for you.

[Image source: austinevan]

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1. Celebrity Tax Problems: Arnold Schwarzenegger
2. Celebrity Tax Problems: Conrad Murray

Of course, this story wouldn’t be complete without the step from acting to politics and now Arnold is the governor of California, a state that is teetering on the verge of financial collapse.

Californians can rest assured that their government officials will pay their federal taxes, as long as they are continuously reminded by the IRS.

Arnold Schwarzenegger tax problems
On May 11, 2009, the IRS filed a $79,000 tax lien against Arnold Schwarzenegger. (Source: The Los Angeles Times). While this is more than many people make in a year, Arnold’s people quickly dismissed it as an error and said the governor paid his tax debt right away.

[Image source: Nate Mandos]

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1. Celebrity Tax Problems: Conrad Murray
2. Bad Beat: A Poker Player’s Tax Problems
3. Celebrity Tax Scandals – Wesley Snipes In Jail

It is said that Conrad Murray has a history of owing people money: According to the Huffington Post, Murray’s medical practice owed thousands of dollars in fines and judgments and overdue fees on loans and credit cards. To top of the “nice guy” image, he also owes thousands in child support and even had a fine of nearly $1,000 for driving with an expired license plate and no proof of insurance.

Conrad Murray tax problem
The Huffington Post also reported that Murray owed back taxes so we went hunting for them and found a tax lien of over $23,000 owing in back taxes in 1993, 1996, and 2003.

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1. Celebrity Tax Scandals – Wesley Snipes In Jail
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