The IRS has made some changed to Income tax lien collections for 2010. The Internal Revenue Service improperly dismissed over $1.4 billion in delinquent taxes between 2002 and 2008 without filing tax liens to collect them. A report, by the Treasury Inspector General for Tax Administration, faulted IRS revenue officers for not documenting valid reasons why they decided not to file tax liens.
The IRS attaches property to insure that it is paid and establishing the IRS’s priority among secured creditors for the taxpayers’ equity. IRS revenue agents are allowed to not file liens when a taxpayer is in bankruptcy, has died without assets, when a corporation is defunct or for a variety of other reasons. IRS agents have to document and include an explanation when they are not filed. Revenue officers are supposed to attempt initial contact with a taxpayer within 45 days after they are assigned the taxpayer’s return. A “module” refers to one specific tax return filed by the taxpayer for one specific tax period (year or quarter) and type of tax (i.e., individual, corporate, employment, excise, etc).
According to the report, the IRS did not file liens for 210 returns at two collection field offices representing a balance due of $6.4 million. In addition, IRS revenue officers did not document valid reasons for not filing attachments when closing as “currently not collectible” an estimated 2,297 modules, with $72 million in delinquent taxes. The report also found that liens were not filed on shelved modules within a certain dollar threshold, even though an IRS study has shown a benefit in doing so. TIGTA’s analysis found that between 2002 and 2008, the IRS shelved, without filing liens, modules representing approximately $1.4 billion in delinquent taxes. Shelved modules are placed in a currently not collectible status and no collection work is conducted. However it promised to improve it’s collection process to comply with regulations.
Nick C. Thompson Louisville Kentucky Income Tax Bankruptcy Attorney
