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Treasury Inspector General for Tax Administration

Press Release

July 28, 2010
TIGTA - 2010-39
Contact: Karen Kraushaar
(202) 622-6500

IRS Does Not Always Protect Taxpayers' Rights When Filing Liens, TIGTA Finds

WASHINGTON - The Internal Revenue Service (IRS) is not always following statutory requirements regarding the timely notification of taxpayers when liens are filed and does not always follow its own regulations for notifying taxpayers' representatives of the filing of lien notices, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

A Federal tax lien is created on balance-due cases in which the taxpayer has received a notice demanding payment and has neglected or refused to pay. The IRS files a Notice of Federal Tax Lien (lien notice) to protect its claims against taxpayers who owe delinquent taxes. These lien notices establish the IRS's priority among secured creditors for the taxpayers' property.

The IRS must notify the affected taxpayers in writing, at their last known address, within five business days of the lien filings. However, as noted in previous TIGTA audits, the IRS has not always complied with this statutory requirement and it does not always follow its own internal guidelines for timely notifying taxpayer representatives of the filing of lien notices.

"This is a serious matter," said J. Russell George, Treasury Inspector General for Tax Administration. "Because of this problem, some taxpayers' rights to appeal the lien filings may have been jeopardized, and others may have had their rights violated when the IRS did not notify their representatives of the lien filings," he added.

TIGTA recommended that the IRS identify any actions necessary to correct the potential taxpayer violations for the untimely lien notices and ensure compliance with undelivered lien notices procedures.

IRS officials agreed with the recommendations and are planning corrective actions.


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