Federal Tax Lien Mailers

The Federal Tax Lien is just one of the many collection tools used by the Internal Revenue Service (IRS) to collect past-due taxes. The Federal Tax Lien secures the IRS’ interest in taxpayers’ property without actually seizing and selling the property on the spot. A tax lien technically attaches to all the taxpayer’s property, whether real or personal, and the IRS may choose to enforce its lien rights at the time the property is sold. In practice, however, the Federal Tax Lien usually only affects rights to real property, or personal property of extraordinary value. The Federal Tax Lien is considered a “passive” collection tool. In contrast, bank levies, wage garnishments, and property seizures are all active collection tools.

Under new IRS guidelines, a Federal Tax Lien should not be filed unless the amount owed is $10,000 or more, although circumstances may warrant that a lien be filed on amounts less than $10,000. Normally a tax lien will not be released until the tax liability has been fully satisfied. However, a tax lien can be released by entering into a Direct Debit installment agreement as long as the total balance is $25,000 or less. The IRS will also release a FTL if the taxpayer can convince the government that releasing the lien will facilitate collection of the tax or that it is otherwise in the best interest of the government.

Although tax practitioners and the Taxpayer Advocate Service have cast serious doubt on the effectiveness of the Federal Tax Lien as a collection procedure, it is still widely used and widely feared to this day. Some tax resolution firms feed off these fears by engaging in questionable direct mail marketing practices. While there is nothing fundamentally wrong with direct mail advertising, it appears that some tax resolution firms may be crossing the line.

Since the Federal Tax Lien filing becomes public record, these firms use the lien amount, filing date, and the name / address of the taxpayer to lend legitimacy to their tax lien mailers. These tax lien mailers are often given the appearance of an official IRS notice, complete with an official-looking seal, fabricated notice numbers, and meaningless codes. Some letters contain tables and formatting that is also meant to replicate the style of IRS correspondences. Most of these mailers, if read carefully and completely, do divulge the true identity of the sender. However, the firm name is usually somewhere near the bottom of the page, in a small font, and absent any contact information other than a toll-free phone number.

Furthermore, the content of the mailers is often inaccurate or misleading. For instance, some Federal Tax Lien mailers state that the IRS is on the verge of taking enforced collection actions against the taxpayer, such as a wage garnishment. This is sometimes the case, but it is impossible to know for sure without checking with the IRS first. Sometimes the filing of a tax lien is a signal that the IRS has actually stopped their active collection efforts. For instance, if a past due tax account has been approved as Currently Not Collectible, the IRS, as a matter of course, will immediately file a FTL to protect its interests, if a FTL has not yet been filed.

The practice of direct advertising itself is not concerning. Those who have been issued a tax lien often do need IRS tax help from a tax relief attorney. However, the public should be able to easily recognize the mail for what it is, an advertisement.

The tax attorneys at Montgomery & Wetenkamp provide tax relief representation and can assist taxpayers in resolving their tax headaches. For more information regarding IRS tax relief or other tax issues, contact Montgomery & Wetenkamp at (800) 454-7043 or mwattorneys@mwattorneys.com.