Federal Tax Lien Withdrawal Request: Does The IRS Comply?

I credit Taxpayer advocate Nina Olson with some fine work getting the word out about federal tax lien withdrawals. In fact, lien withdrawal requests have increased 142% from 2010 to 2011.


A Federal Tax Lien can put a real bind on your cash position. So how has the IRS been doing with these federal tax lien withdrawal requests? The Treasury Inspector General (TIGTA) took a sample of 100 cases  involving the withdrawal requests for a Notice of Federal Tax Lien (NFTL) and found that:


" TIGTA reviewed a statistical sample of 100 NFTL withdrawals and could not find evidence in 15 (15 percent) cases that withdrawals were approved by managers as required."


Other highlights

When withdrawals were forthcoming, there were still delays:

  • Withdrawal certificates were not issued timely to the recording office in 8% of cases.
  • TIGTA also reviewed statistical samples of 100 manual and 185 systemic NFTL releases and determined the releases were not timely in 11 (11 percent) manual and nine (4.86 percent) systemic cases.


Untimely NFTL releases can potentially violate taxpayers’ rights. Typically what we see is that when a lien is unduly delayed, there are two primary issues. First, an improper lien can frustrate a real estate closing (most likely a short-sale).


Another common way a federal tax lien causes problems is that it may hinder someone in the financial services from getting or maintaining a job.


Their suggestions

TIGTA recommended that the Director, Enterprise Collection Strategy, Small Business/ Self-Employed Division: 1) revise procedures to ensure timely approval, processing, and documenting of NFTL withdrawal requests; 2) establish more specific timeliness expectations in the NFTL release procedures; and 3) evaluate whether to modify the 30-day delay in the Automated Lien System when the Collection Statute Expiration Date expires on a non-refiled NFTL, which the IRS agreed with.


My suggestions

These suggestions overlook the biggest stumbling block to getting a lien withdrawn. A lack of staff. The Technical Advisory Group we deal with in Boston on 90% of our cases is vastly overworked. They have fewer employees, and a far bigger caseload (the IRS went lien-crazy in 2008 and 2009). So it would be my humble suggestion to actually hire enough people to administer the tax code properly. Right now it takes 2-3 weeks just to have a lien withdrawal request considered.


If you're dealing with a tax lien issue, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com