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Should the IRS consider a lien moratorium?

Posted by Jesse Singal  January 6, 2011 12:37 PM

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This AP story about the IRS's recent practices points to a sad state of affairs.

When the agency can't get someone to pay taxes after multiple attempts, it will eventually file a lien, meaning the government claims ownership of that person's property to help secure payment. Despite the fact that many Americans are struggling, the agency seems to have greatly ramped up the number of liens it is filing — 1.1 million during the budget year that ended in September, which is five times more than were filed in 1999.

This got the attention of National Taxpayer Advocate Nina E. Olson, who acts as the official IRS watchdog and submits an 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."

It doesn't make sense that the IRS is acting so aggressively at a time when the idea of foreclosure moratoriums has entered the mainstream. If we're willing to give people an extended opportunity to get on their feet when it comes to saving their houses, why not do the same with taxes?

This also seems like an issue that could unite members of the right, who tend to be anti-tax, and the left, who tend to think the government should act to help the least fortunate whenever possible. However you feel about taxes, it's hard to defend a practice that may be costing far more to undertake than it is bringing in in recovered revenue. Any sort of blanket moratorium would be problematic, of course — the government shouldn't effectively announce to people that they no longer have to pay taxes. But surely the IRS could dial back the liens a bit, at least until the economic situation improves.

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ABOUT THE ANGLE Online commentary and news analysis from the Boston Globe. The Angle is produced by Rob Anderson and Alan Wirzbicki. You can follow Rob on Twitter at @rcand.

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