Levin-Begich Bill Would Modernize Tax Lien Filings, Save $150 Million

Wednesday, July 20, 2011

WASHINGTON – Today, citing $150 million in cost savings for federal taxpayers, Sen. Carl Levin, D-Mich., and Sen. Mark Begich, D-Alaska, introduced legislation to modernize the federal tax lien system by moving it from paper-based filings in local recording offices to electronic filings on a national tax lien registry accessible through the Internet.
“Outdated laws are forcing the IRS to waste taxpayer dollars on an old-fashioned, inefficient, and burdensome paper tax lien filing system that could be easily replaced by a modern electronic filing system that could save taxpayers $150 million over the next ten years,” said Levin.  “Using an electronic filing system on the Internet instead of paper files in over 4,000 local recording offices across the country would save millions of taxpayer dollars, while actually improving taxpayer service.  Liens would be filed faster, errors would be easier to detect and correct, and, once resolved, liens could be released quicker -- in 20 days instead of the 30 days now permitted.”
“This legislation will make it easier to shine a light on those trying to cheat the IRS, and put information at the fingertips of business and individuals who want to know who they are dealing with,” Begich said.  “Additionally, anytime you streamline and simplify a government service, you will save taxpayer time and money.  That’s a win for everyone.”
Tax liens are a principal tool used by the Internal Revenue Service (IRS) to collect funds from persons who are delinquent in paying their taxes.  Currently, notices of tax liens must be made public, and are made public by filing them on paper in one or more of 4,100 local recording offices.   
The U.S. Senate Permanent Subcommittee on Investigations, on which Levin serves as the Chairman and Begich is a member, learned of the existing tax lien system while investigating efforts by the IRS to combat abusive tax shelters, offshore tax havens, and tax-delinquent federal contractors.  Currently, to file and track tax liens, the IRS maintains a service center dedicated to monitoring dozens of varying local requirements regulating the format and legal styling applicable to tax lien filings; preparing those liens in the proper format; requesting local officials to file the liens; paying lien filing fees; tracing and replacing lost filings; correcting errors; and, once resolved, releasing appropriate liens. 
The bill would replace the paper filing system with an electronic federal tax lien registry available to the public on the Internet at no cost.  Each federal tax lien would use a common format and be effective from the date and time of its recording in the national registry, in the same manner as now occurs with paper filings.  Once the underlying tax liability was resolved, the IRS would have 20 days instead of the current 30 days to release the tax lien.
Treasury would be required to make the registry secure and prevent data tampering.  Before the registry was implemented, the Treasury Secretary would also be required to review the information currently included in public tax lien filings to determine whether any of that information should be excluded or protected from public viewing on the Internet.  For example, the Treasury Secretary would be expected to end the disclosure of social security numbers that currently are included in some public tax lien filings and thus provide greater privacy protections for taxpayers.  The bill would allow continued use of the existing paper filing system for an appropriate time to ensure a smooth transition.
The IRS has estimated that, over ten years, the new electronic system would result in taxpayer savings of approximately $150 million.  The savings would come from the elimination of state filing fees, mailing and travel costs related to paper filing problems, and the cost of lost taxes when the IRS makes an error or a tax lien filing is misplaced or delayed.  In addition, if enacted, the bill would free IRS employees dedicated to tax lien filings to work on other tax enforcement and taxpayer services.
A summary of the Levin-Begich bill, the bill text, and a statement given by Sen. Levin on the floor of the Senate explaining the bill are available at www.levin.senate.gov.

WASHINGTON – Today, citing $150 million in cost savings for federal taxpayers, Sen. Carl Levin, D-Mich., and Sen. Mark Begich, D-Alaska, introduced legislation to modernize the federal tax lien system by moving it from paper-based filings in local recording offices to electronic filings on a national tax lien registry accessible through the Internet.

Read Sen. Levin's floor statement on the bill introduction here. A summary of the bill is available here. Access the bill text as introduced here.

“Outdated laws are forcing the IRS to waste taxpayer dollars on an old-fashioned, inefficient, and burdensome paper tax lien filing system that could be easily replaced by a modern electronic filing system that could save taxpayers $150 million over the next ten years,” said Levin.  “Using an electronic filing system on the Internet instead of paper files in over 4,000 local recording offices across the country would save millions of taxpayer dollars, while actually improving taxpayer service.  Liens would be filed faster, errors would be easier to detect and correct, and, once resolved, liens could be released quicker -- in 20 days instead of the 30 days now permitted.”

“This legislation will make it easier to shine a light on those trying to cheat the IRS, and put information at the fingertips of business and individuals who want to know who they are dealing with,” Begich said.  “Additionally, anytime you streamline and simplify a government service, you will save taxpayer time and money.  That’s a win for everyone.”

Tax liens are a principal tool used by the Internal Revenue Service (IRS) to collect funds from persons who are delinquent in paying their taxes.  Currently, notices of tax liens must be made public, and are made public by filing them on paper in one or more of 4,100 local recording offices.   

The U.S. Senate Permanent Subcommittee on Investigations, on which Levin serves as the Chairman and Begich is a member, learned of the existing tax lien system while investigating efforts by the IRS to combat abusive tax shelters, offshore tax havens, and tax-delinquent federal contractors.  Currently, to file and track tax liens, the IRS maintains a service center dedicated to monitoring dozens of varying local requirements regulating the format and legal styling applicable to tax lien filings; preparing those liens in the proper format; requesting local officials to file the liens; paying lien filing fees; tracing and replacing lost filings; correcting errors; and, once resolved, releasing appropriate liens. 

The bill would replace the paper filing system with an electronic federal tax lien registry available to the public on the Internet at no cost.  Each federal tax lien would use a common format and be effective from the date and time of its recording in the national registry, in the same manner as now occurs with paper filings.  Once the underlying tax liability was resolved, the IRS would have 20 days instead of the current 30 days to release the tax lien.

Treasury would be required to make the registry secure and prevent data tampering.  Before the registry was implemented, the Treasury Secretary would also be required to review the information currently included in public tax lien filings to determine whether any of that information should be excluded or protected from public viewing on the Internet.  For example, the Treasury Secretary would be expected to end the disclosure of social security numbers that currently are included in some public tax lien filings and thus provide greater privacy protections for taxpayers.  The bill would allow continued use of the existing paper filing system for an appropriate time to ensure a smooth transition.

The IRS has estimated that, over ten years, the new electronic system would result in taxpayer savings of approximately $150 million.  The savings would come from the elimination of state filing fees, mailing and travel costs related to paper filing problems, and the cost of lost taxes when the IRS makes an error or a tax lien filing is misplaced or delayed.  In addition, if enacted, the bill would free IRS employees dedicated to tax lien filings to work on other tax enforcement and taxpayer services.