Legal Bear - Dealing with the IRS


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26 U.S.C. § 7432. Civil damages for failure to release lien says:

(a)   In general If any officer or employee of the Internal Revenue Service knowingly, or by reason of negligence, fails to release a lien under section 6325 on property of the taxpayer, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.

26 U.S.C. § 6325. Release of lien or discharge of property:

(a) Release of lien Subject to such regulations as the Secretary may prescribe, the Secretary shall issue a certificate of release of any lien imposed with respect to any internal revenue tax not later than 30 days after the day on which - (1) Liability satisfied or unenforceable The Secretary finds that the liability for the amount assessed, together with all interest in respect thereof, has been fully satisfied or has become legally unenforceable;

The regulations that the Secretary has prescribed are 26 C.F.R. § 301.6325-1 Release of lien or discharge of property:

(a) Release of lien -- (1) Liability satisfied or unenforceable. Any district director may issue a certificate of release of a lien imposed with respect to any internal revenue tax, whenever he finds that the entire liability for the tax has…become unenforceable as a matter of law (and not merely uncollectible or unenforceable as a matter of fact).

In In re Isom, No. 87-2189 (9th Cir. 1988) a United States Bankruptcy Appellate Panel held that, “…there are clearly other methods that a liability might become legally unenforceable.”

In a treasury Inspector General for Tax Administration memorandum two Deputy Inspector Generals for Audit stated, “…CFf staff are not always filing liens in accordance with Internal Revenue Manual (IRM) guidelines and are interpreting national policies in a variety of ways.” Also they said, “…the IRS should develop a more uniform lien filing policy that will better protect the Government’s interest…” I interpret that to mean, and I would think that you would too, that the IRS is making mistakes throughout their lien filing process; you just need the knowledge to recognize what those mistakes are enabling you to get your lien removed.

A Federal Appellate Court made it clear that to get your lien removed under 26 U.S.C. § 7432 you must first go through the requirements of 26 U.S.C. § 6325 when it said, “Section 7432 amounts to a limited waiver of sovereign immunity for civil damages actions for failure to release a federal tax lien upon notice under I.R.C. § 6325; ...Plaintiff has not shown that he has given notice in accordance with § 6325.” Overton v. United States, 925 F.2d 1282 (10th Cir. 1991). We are supposed to learn from Mr. Overton’s mistake and give notice in accordance with § 6325 before taking any other action.

So, you need to write a letter to the Area Director (who used to be called the District Director) utilizing both 26 U.S.C. § 6325, 26 CFR § 401.6325–1 and 26 C.F.R. § 301.6325 and prove that the lien on your property is “legally unenforceable.” To write an effective letter you will first need information from the I.R.S. You will get that information with:


These “Killer FOIA's” are called this because this package contains requests for forms the IRS is supposed to have before they embark on collection activities, but probably do not have; very embarrassing for them. This “Killer FOIA” package contains the following:

First, you’ll get a request for a 23c form supported by enough exhibits making it plain that you will not settle for anything less than a 23c. The IRS has been responding to FOIA (Freedom of Information Act) requests for a 23c by trying to substitute a RAACS Reports or a 4340 Form. The reason they try and do that is because they do not in all likelihood have a 23c form filled out and signed for you and up until 2002 their Internal Revenue Manual required them to before they could move forward with attempts to collect. With this package you will receive digital exhibits that go with this FOIA that are numerous. In these exhibits are copies of the internal instructions to the disclosure officer about what to do to cover up the fact that the 23c requirement has not been met. A lien cannot possibly be valid without a valid assessment. If your file is typical, there is no valid assessment providing you with your first good administrative issue for you letter respecting why the lien is “legally unenforceable.”

Secondly, you’ll get a request, supported by exhibits, for a Non-Master File Assessment Voucher. Without this voucher they cannot pursue collection of penalties and interest from you. They probably do not have one. Most notice of liens include penalties and interest in the amount of the lien and sometimes these penalties and interest can be substantial as a lot of you know.

Thirdly, you’ll get a request for a Notice of Assessment supported by exhibits. The statute requires them to provide you with a copy if you request it; how comical if they are pursuing collections on you via a notice of lien without one because their own IRM says, “The Assessment Certificate is the legal document that permits collection activity.” This could turn out to be a great issue for your letter; especially if it is backed up by a certification by the disclosure officer as an exhibit that no record exists.

Fourthly, Federal Regulations require the District Director to appoint Assessment Officers that are qualified to sign the above millions and millions of forms for American Taxpayers. The fourth “killer” request is for the names of the Assessment Officers appointed by the Director for the years in question. Can they tell you those? Probably not; assessment officers probably don’t exist in sufficient numbers that one actually worked on your case. Do they want to tell you those names? Probably not. Each of these requests include a request for a certification that the record does not exist that you can use in court if need be.

Fifth, you’ll get a FOIA request asking for Form 668-F, Notice of Federal Tax Lien under Internal Revenue Laws, Part 2, signed by an authorized IRS officer certifying that “Demand for payment of this liability has been made, but it remains unpaid.” Do they have one of these for you; probably not. You’ll have one more good issue for your letter.

Sixth, you’ll get a FOIA request asking for a copy of the certified amount that you owe on the proper IRS form used for the certification process pursuant to 26 C.F.R. § 301.6305-1(b)(4)(ii) supported by an exhibit. That could be another good issue for your letter.

And lastly, you’ll get a FOIA request for all the files being maintained in the “Integrated Collection System” maintained by the IRS about you pertaining to liens. Who knows what you’ll find in there; there could be some really good stuff.

I suggest that you send one of the above FOIAs per week to avoid copying charges by the disclosure officer. Send these FOIAs, get back the responses; review 26 U.S.C. § 6325 and 26 C.F.R. § 301.6325 that are included as part of this package. Also review 26 CFR § 401.6325–1(f) to be sure that your request for a certificate of release with respect to a notice of Federal tax lien includes everything it is required to.  Plus, review the ten published cases respecting these statutes that are included in this package and you are ready to write your § 6325 letter.

I am of the opinion that this will not work unless your letter sounds like you know what you are doing. The only way to do that is to sit and read all of the cases, statutes, and regs that are part of the package. It is important that each person do this because when the letter reaches the Area Director's office he is already going to know which arguments are valid and which ones are not. The Area Director/District Director is not going to declare your lien “legally unenforceable” unless your letter is credible. This is the reason I keep checking the case law and try to stay current. He is going to know what the courts have done most recently and so should we. If your letter contains arguments that are not valid it will not be credible nor will it be effective.

Send the letter in and wait for your response. If the Area Director denies your demand letter to remove your lien, it is not proof that your issues are not valid you are simply on to the next step. You have complied with what is known in law as “condition precedent.” If you don’t do first things first, you will not like the results. Next step:


After you’ve gotten a negative response to your demand that the IRS remove the lien, you may be asking, what will I do next? I spent a lot of hours over a several month period finding the answer to that question. I reviewed a lot of cases over that time and eventually came across some cases where judges explained the remedy; 26 USC § 7432. In summary, the Tax Payer’s Bill of Rights waived the United States sovereign immunity and made it possible to sue for their refusal to remove “legally unenforceable” liens because of the filing of them without following procedure such as the above FOIAs will expose. 26 CFR § 301.7432-1 requires that:

(e) No civil action in federal district court prior to filing an administrative claim—(1) Except as provided in   paragraph (e)(2) of this section, no action under paragraph (a) of this section shall be maintained in any federal district court before the earlier of the following dates:

(i) The date a decision is rendered on a claim filed in accordance with paragraph (f) of this section; or

(ii) The date 30 days after the date an administrative claim is filed in accordance with paragraph (f) of this section.

(2) If an administrative claim is filed in accordance with paragraph (f) of this section during the last 30 days of the period of limitations described in paragraph (i) of this section, the taxpayer may file an action in federal district court anytime after the administrative claim is filed and before the expiration of the period of limitations, without waiting for 30 days to expire or for a decision to be rendered on the claim.

26 U.S.C. § 7432(d) provides:

Limitations (1) Requirement that administrative remedies be exhausted A judgment for damages shall not be awarded under subsection (b) unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service.

Can you see what they are doing? They want you to send in your administrative letter and give them an opportunity to prevent you from suing them. What you would hope that means, and what is likely to occur, is that the lien will be removed without you ever having to go to court!

26 CFR § 301.7432-1(f) requires that you send your letter to the Chief of Special Operations function in the District Director’s Office. This guy has the ability, based on a well worded letter complying with the statutes and regulations, to call off the dogs so to speak. Heck, he can even award you damages if your letter is good enough (yeah right). Anyway, now there is somebody that will actually read your correspondence that has the power to do something other than file it. My first letter based on § 7432’s sister statute § 7433 (which works on almost exactly the same process as § 7432) caused the IRS to withdraw one levy and not to execute on a second that they had threatened. A friend that used this process mentioned in passing that after sending in his letter his next Social Security check was for the full amount. Of course, if you hadn’t guessed already, those letters both threatened to sue.

Who could ever imagine that curtailing IRS collection activity could be as simple as sending a well worded, authoritative letter to the person that has the power and authority to stop illegal tax collection activity? In the treasury Inspector General for Tax Administration memorandum linked to above the two Deputy Inspector Generals for Audit state, “With its current processes, the IRS does not have enough resources to resolve all the balance due accounts in its inventory. To deal with this, years ago the IRS created the Queue to hold cases for future assignment to revenue officers who make personal contact with taxpayers. The collection potential of each delinquent account is prioritized by computer as high, medium, or low risk, based on case type, amount, and skills required to work the case. Accounts meeting certain criteria are immediately assigned to revenue officers, while others are assigned from the Queue to revenue officers as workload permits, based on their assigned priority.” Not only is the IRS in this situation, so is the U.S. Attorneys’ office. It is this overbearing workload on both to their parts that works in your favor when using this process; they don’t want anymore lawsuits! This concept makes it a very strong likelihood that you’ll win while you are exhausting your administrative remedies.

There are probably many unpublished wins that we’ll never hear about that were taken care of administratively. If you would like your letter to carry some weight and to succeed, the Chief of Special Operations must find your letter threatening to sue informed and credible. The way you can accomplish this is by studying. This package includes the seven FOIAs mentioned above and their accompanying exhibits. Plus, I collected together thirty-nine published decisions on § 7432, ten cases on § 6325, the applicable regulations including 26 CFR § 401.6325–1 on where to send your first demand for Release of liens, and the statutes themselves and have packaged that together with the letter I wrote that was successful on using the sister statutes § 7433. The letter I wrote is not a boilerplate letter that you can just put your name at the top of. You have to use it as a model for your own unique letter. It doesn’t discuss any of the above KILLER FOIA's at all. Numerous people have already used this process to successfully remove levies and there is every reason to believe that it will work equally as well on bogus Notices of Lien.








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