TIGTA Finds IRS Is Not Always Following Procedures For Tax Liens

In 2021, the Internal Revenue Service filed 212,251 Notices of Federal Tax Lien (“NFTLs”). To provide perspective, in 2019 (i.e., pre-COVID-19 pandemic), the IRS filed 543,604 NFTLs. The IRS is working on ramping up its enforcement efforts; however, the IRS must follow certain procedures with respect to filing NFTLs against taxpayers. The Treasury Inspector General for Tax Administration (“TIGTA”) recently performed its annual audit to review the Internal Revenue Service’s legal compliance with respect to NFTLs. While TIGTA found general compliance by the IRS, it also noted several areas of improvement.

NFTLs and Section 6320(a)

Section 6320(a) of the Internal Revenue Code explicitly provides that the IRS must file a notice of lien, assuming it complies with certain restrictions on timing, service methods, and notice information. Specifically, Section 6320(a) provides as follows:

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Expat Execution - TIGTA Audit Recommends IRS Increase Its Enforcement Efforts

One might not expect it, but the United States has experienced an increasing trend in number of expatriates in the last decade. Each year, thousands of individual taxpayers relinquished either their U.S. citizenship or permanent resident status, peaking in 2016 with 5,405 total expatriates. Expatriates are required to comply with specific tax provisions. The Treasury Inspector General for Tax Administration (“TIGTA”) ultimately performed an audit to assess the reliability and effectiveness of the Internal Revenue Service’s efforts to ensure taxpayer (or former taxpayer) compliance.

Sections 877 and 877A, Generally

Sections 877 and 877A of the Internal Revenue Code govern the tax provisions related to expatriates. Under these provisions, certain taxpayers who relinquish their U.S. citizenship or long-term residents who terminate their U.S. residency may be subject to certain tax consequences. Specifically, such taxpayers must certify on Form 8854, Initial and Annual Expatriation Statement, their compliance with all U.S. federal tax laws for the five years prior to the date of expatriation and determine whether they are “covered expatriates.”

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