The Internal Revenue Service (IRS) attempts to collect Federal taxes due from taxpayers by sending letters, making telephone calls, and meeting face-to-face with taxpayers. The IRS has the authority to attach a claim, commonly referred to as a Federal tax lien, to the taxpayer’s assets for the amount of unpaid tax when the taxpayer neglects or refuses to pay. The IRS files a Form 668(Y)(c), Notice of Federal Tax Lien (NFTL), in appropriate local government offices to notify interested parties that a lien exists.
The IRS is required to notify taxpayers the first time an NFTL is filed.
Since January 19, 1999, Internal Revenue Code (I.R.C.) Section (§) 6320(a) has required the IRS to notify taxpayers, in writing, within five business days of the filing of an NFTL. The IRS is required to notify taxpayers the first time an NFTL is filed for each tax period. The lien notice is used for this purpose and advises taxpayers that they have 30 calendar days, after that five-day period, to request a hearing with the IRS’s Office of Appeals. The lien notice indicates the date on which this 30-day period expires.
The law also requires that the lien notice explain, in simple terms, the amount of unpaid tax, the administrative appeal rights available to the taxpayer, and the provisions of the law and the procedures relating to the release of the lien on the property. The lien notice must be given in person, left at the taxpayer’s home or business, or sent by certified or registered mail to the taxpayer’s last known address.
In Fiscal Year 2011, the IRS implemented the Fresh Start initiative to provide aid to struggling taxpayers. This initiative increased the threshold when NFTL filing determinations are generally made from $5,000 to $10,000.