The National Taxpayer Advocate accused the Internal Revenue Service of using tax liens to inflict unnecessary harm on financially struggling taxpayers in a January 2011 report to Congress.
The taxpayer advocate called the use of tax liens amid high unemployment and a faltering economy “torment,” and said the practice is not effective in collecting back taxes.
“By filing a lien against a taxpayer with no money and no assets, the IRS often collects nothing, yet it inflicts long-term harm on the taxpayer by making it harder for him to get back on his feet when he does get a job,” National Taxpayer Advocate Nina E. Olson said.
“Absent data that show liens make a meaningful contribution to revenue collection and especially in this economy, I find it unacceptable that the IRS continues to torment financially struggling taxpayers in this way.”
Tax Lien Definition
The filing of tax lien is a formal process by which the government makes a legal claim to property as security or payment for a tax debt. A tax lien serves as a public notice to other creditors that the government has a claim on the property.
Tax liens appear on credit reports and can remain there for up to seven years, meaning that they can prevent consumers from getting approved for loans, credit cards, apartment rentals and even jobs.
