WASHINGTON – A government watchdog says the Internal Revenue Service is tormenting struggling taxpayers in the midst of a slumping economy by increasing the number of liens the agency has filed against people who owe back taxes.
The IRS filed nearly 1.1 million liens in the budget year that ended in September, a 14 percent jump over the previous year. Liens punish taxpayers and often hurt their ability to pay back taxes, National Taxpayer Advocate Nina E. Olson said Wednesday in her annual report to Congress.
“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,” said Olson, an independent watchdog within the IRS. “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.”
The IRS responded that liens are not filed until taxpayers are given numerous opportunities to pay their tax bills or sign up for payment plans.
IRS spokeswoman Michelle Eldridge said the agency has taken steps to help taxpayers facing financial problems, including increased flexibility in installment agreements and other collection efforts.
“The IRS recognizes that many taxpayers are struggling financially,” Eldridge said. “The IRS has taken numerous steps to help taxpayers facing tough times in the past two years.”
Each year, Olson reports to Congress on the issues she deems important to administering the tax code. This year, Olson highlighted collection efforts, the complexity of the tax code and the need for tax reform, and the challenges facing the IRS in implementing the new health care law.
Liens give the federal government a claim on property to help secure payment of back taxes.
They are filed publicly for tax debts that are deemed uncollectable, alerting creditors and others that taxpayers owe back taxes.