5.12.11 Lien Special Topics

Manual Transmittal

October 14, 2013

Purpose

(1) This transmits the new IRM 5.12.11, Federal Tax Liens, Lien Special Topics.

Background

A revision of the IRM 5.12 chapter has been done to consolidate and coordinate like topics, reduce duplication of content, and provide an overview, cross-references, and contacts.

Material Changes

(1) Introduces new IRM with title of Lien Special Topics covering the topics of identity theft and disaster as they relate to notice of lien and lien certificate processing.

(2) The following table provides a cross walk of sections MOVING TO IRM 5.12.11 FROM other IRM 5.12 location(s)

Moving from ____ to IRM 5.12.11
5.12.2.25
5.12.6.10

(3) 5.12.11.2 updated reference to Form 14039 which is the IRS' Identity Theft Affidavit and removed reference to the Federal Trade Commission's Identity Theft Affidavit

(4) 5.12.11.2 has been updated to reflect current guides and information locations.

(5) 5.12.11.3 added for return preparer misconduct.

Effect on Other Documents

This material supersedes IRM 5.12.1, dated January 9, 2009, IRM 5.12.2 dated March 8, 2012, IRM 5.12.3 dated June 1, 2010, and IRM 5.12.6 dated July 16, 2010.

Audience

SBSE and W&I Collection, Centralized Lien Operation, and Appeals

Effective Date

(10-14-2013)

Michelle C. Alvarado
Acting Director, Collection Policy
Small Business/Self Employed Division

Purpose

  1. The purpose of this IRM is to provide instructions on the identification, analysis, recommendations, and processes for identity theft as they relate to liens, lien notices, and lien certificates.

Identity Theft Overview

  1. Identity theft is the use of another person’s identifying information stolen from a wide variety of places and through a wide variety of means. If identity theft is established, the appropriate steps should be taken immediately to ensure the innocent taxpayer is not harmed.

  2. With respect to the IRS, identity theft manifests itself in several ways.

    1. It is used to defraud the government of funds through the filing of fraudulent refund claims.

    2. In many instances it victimizes an innocent taxpayer by impeding his or her ability to get a refund from us.

    3. In some cases the Identity Theft is for personal or business purposes such as obtaining employment.

    4. Fraudulent filings may also cause us to initiate an adverse enforcement action against the innocent taxpayer.

    5. For a more in depth discussion of the ways in which identity theft can manifest itself, see IRM 10.5.3, Identity Protection Program.

  3. For Collection purposes, IRM 5.1.12.2, Identity Theft, and any associated Interim Guidance should be followed in resolving these cases.

Identity Theft and Liens

  1. Notices of Federal Tax Lien may have been filed against taxpayers indicating there is a statutory lien against the victim(s) of identity theft. (See IRM 5.12.2.4 (5) (e) for information on lien notice filing determinations in identity theft situations).

  2. The IRS has standards when requesting documentation and resolving cases involving identity theft. See IRM 5.1.12.2 and IRM 10.5.3 for those standards and instructions.

  3. Because of the variety of types of identity theft, there are now differing solutions for Revenue Officers to follow. See IRM 10.5.3, Identity Protection Program. IRM 10.5.3.2.5, Identity Theft Tracking Indicators, IRM 10.5.3.2.6, Initial Allegation or Suspicion of Tax-Related identity Theft - Identity Theft Indicators, and IRM 10.5.3.2.7, Overview - Identity Theft Supporting Documentation.

  4. Taxpayers may also be directed to IRS.gov for the following information:

  5. Internal IRWeb information on this topic can be found at, Identity Protection (Identity Theft).

Recorded NFTLs

  1. This section provides instructions where an NFTL has been filed and:

    • you establish identity theft has occurred, and

    • you have taken the appropriate case action steps to adjust the liability.

  2. Where the NFTL will retain a tax liability for the taxpayer after the identity theft abatement(s), below are the potential resolutions that can be utilized if requested by the taxpayer:

    • If only a portion of an existing module's liability is abated then amend the NFTL. (See IRM 5.1.12.2, Identity Theft Case Resolution, and IRM 5.12.7.9.3 , Amending the NFTL Using the ALS Amend Option).

      Example:

      An NFTL is filed on the taxpayer's 2007 income tax showing an original assessment on a Transaction Code (TC) 150 along with an additional assessment (TC 290). The TC 290 additional assessment is subsequently found to have been the result of Identity Theft and is abated. The NFTL can be amended to remove the additional assessment.

    • If an entire module's liability is abated but the NFTL contains other modules which will not be abated, a partial release may be requested under the IRC § 6326 erroneous lien provisions. See IRM 5.12.3, Lien Release and Related Topics, for those instructions.

      Example:

      An NFTL has been filed for the taxpayer's 2008, 2009, and 2010 income tax liabilities. The 2010 liability is subsequently found to have been the result of Identity Theft and is abated in full. A partial erroneous lien release may be issued for the 2010 liability.

  3. If the requested abatement results in eliminating the tax liability for all the periods listed on an NFTL, request a release under IRC § 6326 erroneous lien provisions. See IRM 5.12.3, Lien Release and Related Topics, for those instructions. Ensure that the release under IRC § 6326 is requested before the liability is abated and before a systemic release is issued through the Automated Lien System (ALS).

  4. A withdrawal of the lien notice may be considered in lieu of or in addition to an amended lien notice or erroneous lien release. (See IRM 5.12.9, Withdrawal of Notice of Federal Tax Lien). The withdrawal recommendation must include not only the identity theft determination but any additional factors the withdrawal is being consider under.

  5. Document the ICS and the Automated Lien System (ALS) case histories with the identity theft determination and the actions taken.

Unrecorded NFTLs

  1. NFTLs may be corrected prior to being mailed to the recording office. Immediately contact Centralized Lien Operation (CLO) via secure email, followed by a phone call to request the correction.

  2. Corrections must be made before 8:00 AM Eastern Time on Tuesday and Thursday. (CLO prints all documents twice weekly.)

  3. Document the ICS and ALS history with any change(s) requested.

Where CLO Refers Identity Theft Receipts

  1. Centralized Lien Operation refers all cases regarding identity theft to the function currently controlling the case.

    1. Status Code 26 - to the requesting field employee

    2. Status Code 71 - to the appropriate OIC Unit

    3. Status Code 72 where the last TC 520 on module is cc 70, 71, 73, 74, 75, 80 or 82 - to the appropriate Area Advisory office

      Note:

      TC 520 cc 71 - 74 are cases generally assigned to either Exam or Counsel.

      Note:

      TC 520 cc 76 and 77 are cases assigned to Appeals.

    4. Status Code 72 where the last TC 520 on the module is cc 76 or 77 - to the appropriate Appeals office

    5. Status Code 72 where the last TC 520 on module is cc 60-67, 81, 83-89 - to the Centralized Insolvency Office

    6. Innocent Spouse - identified by MFT 31, TC 971, AC 104 - if appropriate, to the Cincinnati Innocent Spouse Unit

    7. Cases no longer in inventory are referred to the Area Advisory office where the taxpayer resides.

  2. CLO documents the referral in the ALS history, including the date the referral is made, the status and name of the employee or office where the referral was forwarded.

  3. These are all the actions CLO is required to take. The function identified by CLO takes over and will follow the instructions in IRM 5.12.11.2.2, IRM 5.1.12.2, Identity Theft, and any associated Interim Guidance.

Return Preparer Misconduct

  1. Return Preparer Misconduct can occur when a tax return preparer completes a return for a taxpayer and, without the taxpayer’s knowledge, makes changes to the return, which results in an improper refund to the preparer or a third party. Taxpayers may not know there is an issue until the IRS contacts them about the return well after refunds have been issued. See also Interim Guidance SBSE-05-0613-0034, Return Preparer Fraud or Misconduct, any successor Interim Guidance, or IRM 5.1.27 when the guidance is incorporated into the IRM.

  2. If a taxpayer alleges that this type of misconduct has occurred and a lien notice determination is or needs to be made, defer the filing determination until the circumstances are clarified. Taxpayers can report this activity on a Form 14157, Return Preparer Complaint accompanied by a Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

  3. If return preparer misconduct is confirmed and a lien notice has been filed, follow the instructions in IRM 5.12.3.9, Erroneously Filed Notice of Federal Tax Lien, to initiate an erroneous lien release.

Procedures for Natural Disasters and NFTL Filing

  1. A major disaster is defined as any natural catastrophe in any part of the United States which causes sufficient damage to warrant major disaster assistance. Disasters may also be caused by terrorist or military action. Throughout the IRM, the term disaster encompasses all of the above causes. When a disaster or other emergency occurs and if the situation is beyond the capabilities of local and state authorities, the Governor may request that the President declare a “major disaster” or an “emergency”. IRM 25.16.1, Disaster Assistance and Emergency Relief, Program Guidelines, contains an overview and service wide disaster policies. Field Collection guidelines can be found in IRM 5.1.12.3, Disaster Assistance and Emergency Relief Overview. See also the SBSE web page Disaster Assistance and Emergency Relief. Taxpayers can be directed to Disaster Assistance and Emergency Relief for Individuals and Businesses.

  2. Collection Policy will simultaneously notify the CLO Program Manager as well as Compliance Services Operations when disaster procedures are implemented prior to a nationwide notification and will provide zip codes based on information obtained from master file and the Headquarters disaster recovery analyst.

  3. The printing of the NFTL triggers the issuance of CDP notices. When the impact of the disaster may affect postal services, Policy may elect to stop the issuance of lien documents until a postal delivery determination is made. These procedures will be implemented as needed.

  4. Functional Coordinators will input the appropriate state or zip codes into ALS to ensure that lien notices are not created.

  5. Collection Policy will simultaneously notify CLO and Operations when to resume NFTL generation. This decision will be based on the disaster provisions used nationwide (See IRM 25.16.1).

Procedures for an Automated Lien System Disaster

  1. The following procedures will be followed if there is an ALS disaster (the database is not available), as identified by headquarters personnel, lasting three days or more, and when the recording offices are not impacted. Lien documents will not be filed in electronic filing courts without contingency plans, i.e., Manhattan, NY, US District Court, Boston, MA, Minnesota, LA County, CA, and the Connecticut Secretary of State.

  2. Lien documents will be prepared for jeopardy/termination or hardship situations.

  3. Revenue officers and advisors will:

    1. use ICS template forms to prepare lien documents.

    2. create a SLID using the area/group/territory/employee TSIGN, then sequential numbering, e.g., 211003231222-01,

    3. file documents locally, when appropriate.

    4. attach prepared documents to Form 3210 for lien documents requiring filing in other areas and secure e-mail a request to file the document after determining the appropriate group. The receiving group will file the lien document and return recording information to the requesting employee within 7 calendar days.

    5. post transaction codes TC 582 to set lien filed indicator and TC 360 with the appropriate filing fee.

    6. document case histories, including the date forwarded to CLO and the serial number from (3)(b).

    7. secure e-mail CLO copies of recorded documents.

  4. Employees without ICS access will use the Intranet fillable forms to prepare lien documents. Requests will be secure emailed to CLO. The procedures outlined in (3)(a) through (3)(g) will be followed.

  5. When an NFTL is issued, the appropriate collection due process notice with enclosures will be prepared and mailed by requesting employees. Certified or registered mail will be used when appropriate. Issue one of the following notices:

    1. Letter 3172, Notice of Federal Tax Lien Filing and Your Rights to a Hearing Under IRC 6320,

    2. Letter 3171, Notice of Federal Tax Lien Filing,

    3. Letter 3177, Letter Notifying of Federal Tax Lien Filing-Nominee or Alter-Ego,

    4. Letter 3527, Notice of Federal Tax Lien Filing - Child Support Obligation,

    5. Letter 3886, Notice to Taxpayer of Nominee/Alter-Ego of Federal Tax Lien Filing.

  6. Employees will document case histories with lien notice filing or release request information. Include sufficient information to identify the request.

  7. When ALS production resumes, CLO will input these documents to the database using SCreate from documents provided by the requesting employee.