The Internal Revenue Service was reprimanded by the Treasury Inspector General for Tax Administration for failing to follow statutory requirements in notifying taxpayers when it files tax liens against them. TIGTA also found that the IRS does not always follow federal regulations for notifying taxpayers’ representatives while filing of lien notices.

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

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