IRS announces relaxed lien rules

“These steps are in the best interest of both taxpayers and the tax system,” Doug Shulman, the IRS commissioner, said in a statement. “People will have a better chance to stay current on their taxes and keep their financial house in order. We all benefit if that happens.”

The IRS action comes weeks after Nina Olson, the nation’s taxpayer advocate, said in her yearly report that the agency could do a better job of balancing the government’s need to collect revenue with a desire not to unnecessarily harm taxpayers. According to The Associated Press, the IRS filed more than twice as many liens in the most recent completed fiscal year as it did in 2001.

The new rules would double the lien threshold, from $5,000 to $10,000, and call for liens to be withdrawn at someone’s request if his or her taxes have been fully paid. (In short, a lien is notice that the government has a claim to property because of unpaid taxes.)

“These changes mean tens of thousands of people won’t be burdened by liens, and this step will take place without significantly increasing the financial risk to the government,” Shulman said.

If taxpayers have debts of under $25,000, they can also have their lien withdrawn by entering into a sort of direct-deposit agreement with the IRS. Small businesses with debts of up to $25,000 will also be able to participate in a payment program, after previously only being eligible if their debts were under $10,000.

And the IRS will also allow taxpayers who make up to $100,00 a year to participate in what the agency terms the Offer in Compromise program. That initiative allows the IRS to settle a taxpayer’s bill for less than what is fully owed. 

In its release, the IRS noted this is just its most recent effort to help taxpayers with liens. In 2008, the agency announced it was offering lien relief to certain homeowners.