by Brian Mahany
The IRS issues tens of thousands of tax liens each year. These liens not only effect the ability to sell one’s property but are also very damaging to credit scores. Your score may go down by 100 points for simply having a tax lien. Even if the tax debt is promptly paid, the effect of the lien may last for a long time. Now the government says that 32,ooo tax liens may have been improperly filed by the IRS last year.
In a report dated May 13th, 2011, the Treasury Inspector General for Tax Administration (TIGTA) found many problems with the IRS lien process. TIGTA is the oversight agency within the Treasury Department responsible for making sure the IRS does a fair and efficient job of administering America’s tax laws.
In reviewing the IRS lien process, the inspector general found that the IRS does a pretty good job in sending lien notices timely. When a taxpayer has moved or has an accountant or lawyer, however, the IRS often makes mistakes. Those mistakes could violate a taxpayer’s rights and could invalid the lien. That’s good news for taxpayers.
Since January of 1999, the IRS is required to notify taxpayers within 5 business days of the filing of a lien. The notice is important because it tells the taxpayer how much is owed and how to contest the lien. The timing of the notice is important because it effects one’s ability to request an appeal.
Liens were once delivered more in hand but today are sent by certified mail. There are special procedures to insure that people with tax professionals have notices sent to their lawyer or accountant and special procedures to insure that people who moved still receive their notice and right to appeal. That’s where the IRS falls short of expectations. [In fairness to the IRS, the percentage of problem liens is much lower than it was a few years ago. Back in 2006, sometimes the IRS would violate lien procedures 75% of the time!]
Overall, the procedural error rate for tax liens is approximately 3%. That number is much higher, however, when taxpayers have moved or when they have hired a tax professional. In other words, wealthier taxpayers often have invalid liens. Because people’s credit and important rights are at risk, we believe that any mistakes are intolerable.
What does this mean for taxpayers? Don’t assume that just because you have owe taxes and the IRS filed tax liens that all correct procedures were followed. The IRS can and does make mistakes. A good tax lawyer or CPA can help investigate whether all procedures have been followed and can often help remove liens.
As previously indicated in this blog, tax lien withdrawals are often available (type in “lien release” in our blog search engine or visit our Hot Topics page on our home page). Although a lien release will remove the lien, your credit may remain ruined for some time. A lien withdrawal, however, can instantly correct credit score problems.
Even if you can pay off the lien, consult with a tax professional to see if you qualify for a lien withdrawal or if the lien was filed in error.
For more information, contact attorney Brian Mahany for a confidential consultation at (414) 704-6731 or by email at Our tax lawyers have helped clients from Maine to Hawaii and most places in between. Tax liens, collection representation and offers in compromise, we can help.
Mahany & Ertl, LLC – America’s tax lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services nationwide.