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IRS Issues New Rules for Individual Tax Liens


For some people, there is nothing more fearful than receiving a notice from the Internal Revenue Service. The ultimate fear is that the service will place a tax lien on their home or possessions in the amount of the unpaid taxes. This can result in damaged credit ratings, and difficulties in borrowing money or receiving a good mortgage rate. The fear of tax liens is well founded in that more than 1.1 million liens were placed on Taxpayers’ possession last year alone. The Taxpayer Advocate, Nina Olson, has stated that the IRS has been too quick to issue liens on Taxpayers without doing a full investigation.

Now, the IRS has issued new rules that would help individuals with tax debt to recover more quickly. These rules offer relief to individual Taxpayers, as well as, small businesses. Here are some of the new rules:

  • The IRS is prohibited from filing a tax lien unless the unpaid tax liability exceeds $10,000.00.
  • The service will now be granting more lien withdrawals (as opposed to lien releases). A lien withdrawal removes the lien from the Taxpayer’s records, as opposed to a lien release which leaves the lien on the Taxpayer’s record for 7 years. This has a more positive effect on the Taxpayer’s credit.
  • Lien withdrawals, usually available when the tax debt has been fully paid, can now be utilized when the Taxpayer still has a tax debt. The lien withdrawal would be allowed if the Taxpayer enters into a direct debit installment agreement, and the amount of tax due is less than $25,000. A direct debit installment agreement allows the IRS to remove payments directly from the Taxpayer’s bank account.
  • For small businesses, the IRS is offering streamlined installment agreements which give small businesses up to 24 months to pay debts of $25,000 or less. In order to utilize this option, the business must allow for direct removal of funds form its checking account.
  • Finally, for Taxpayers who cannot pay their tax bill, the offer in compromise program has been expanded. The offer in compromise program allows Taxpayers to negotiate with the IRS to pay a portion of their tax debt when it is established to the IRS’s satisfaction that the Taxpayer does not have the funds to pay the tax in full. Taxpayers with income of as much as $100,000 may also be eligible for this compromise program if their total tax liability is $50,000 or less.

With these new rules, the IRS has taken steps in the right direction towards easing the burden on Taxpayers with tax debt, and reducing the number of tax liens being issued. This creates a good opportunity for individuals who have struggled with their tax bills to get relief and remove some of the pressure and stress associated with back taxes. If you have any questions about these changes or need assistance responding to collection notices or arranging an installment agreement, please contact your Marcum Tax professional.

If you have any questions about these changes or need assistance responding to collection notices or arranging an installment agreement, please contact your Marcum Tax professional.




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