Internal Revenue Service changes to less-draconian tax lien procedures

The IRS is easing its guidelines on property tax liens and giving delinquent working class individuals more possibilities to pay their tax bill. Tax liens, also as offer-in-compromise agreements could be affected by a higher level of tax debt necessary to implement those procedures. When delinquent taxes are paid, the IRS will withdraw, rather than release the lien, which will mitigate the negative impact on the taxpayer’s credit score. Source for this article – IRS raises the debt threshold that triggers a property tax lien by MoneyBlogNewz.

IRS calls off the dogs (sort of)

A lien is used by the IRS when unpaid tax debt is found from an American making it so the taxpayer's property is legally owned by the IRS. Priority is given over other creditors that might be owed by a taxpayer with the IRS tax lien. There has been a rise from $5,000 to $10,000 in the threshold for filing a tax lien due to brand new Internal Revenue Service guidelines. For back taxes of $25,000 or less, the Internal Revenue Service is also offering to withdraw a tax lien if the taxpayer establishes installment payments through direct-debit from a financial institution account. It is important that a lien is withdrawn rather than released. This keeps it so the taxpayer's credit history remains cleared. The previous practice of “releasing” the lien did not remove the tax debt from a credit history.

Even more Internal Revenue Service lien changes going on

The Internal Revenue Service made other tax collection changes for instance allowing offer-in-compromise agreements for taxpayers making it so less than the full amount of taxes is owed back. Individuals and small businesses have elevated the offer-in-compromise agreement qualification debt from $25,000 to $50,000. The annual income threshold for offer-in-compromise agreements has also been elevated from $50,000 to $100,000. Those applying for a compromise can be less frustrated with the agency too. This is because personal conversations rather than letters can be used for contact. Another thing the Internal Revenue Service changed is that individuals can now make one other payment instead. This is to an automobile payment.

Exactly what a National Taxpayer Advocate did

National Taxpayer Advocate Olson is most likely the reason for the IRS tax lien changes. The argument from Olson was always the IRS hurts people that are simply trying to pay debts. America's bad economy has lead to more lien filings. There was a 14 percent increase in 2010 alone. In 1999, tax liens were much lower. There has been a 550 percent increase ever since then. If tax debts get to the threshold while the taxpayer's ability to pay isn't there, the IRS will file liens. There is not anything to suggest tax liens are worth it. They seem to cost more than they’re worth.

Articles cited

Market Watch

marketwatch.com/story/irs-eases-up-on-people-who-cant-pay-tax-bill-2011-02-24

CBS Money Watch

moneywatch.bnet.com/investing/blog/make-money/stop-the-irs-from-destroying-your-credit-4-moves/870/

Journal of Accountancy

journalofaccountancy.com/Web/20113894.htm