How many Federal tax liens are filed each year?

The IRS files far fewer Forms 668-Y, Notice of Federal Tax Lien, than most tax professionals presume. In fact, the number of liens filed each year has been rapidly dropping over the past several years.

According to the annual IRS Data Book, here are the number of IRS tax liens placed on public record each year:

2009: 965,618
2010: 1,096,376
2011: 1,042,230
2012: 707,768
2013: 602,005
2014: 535,580
2015: 515,247
2016: 470,602
2017: 446,378
2018: 410,220

As you can see, the number of tax lien records filed by the IRS peaked in 2010 at just shy of 1.1 million. In the intervening eight years, annual lien filing volume has dropped a whopping 63%.

At the same time, however, the number of IRS Collections cases has been steadily increasing each year. In 2010, the IRS started the fiscal year with 9.6 million open tax debt cases. We started fiscal year 2018 with almost 14.1 million open tax debt cases, and increase of 45%. It’s interesting to note that the number of tax debt cases, and the dollar amount owed to the IRS, has skyrocketed during one of the strongest periods of economic recovery in American history. This clearly indicates that many small businesses and individuals have still been feeling the impact of the 2007-2008 crash many years after it happened.

So why has the IRS been filing fewer tax liens? There are a number of reasons.

First of all, the federal government has a statutory tax lien over any tax debtor, whether they file the 668-Y or not. Thus, it’s not actually necessary for the IRS to file the lien to take collections action. The filing of the lien merely perfects the government’s lien and establishes priority under state law.

Second, the service made changes in 2011 and 2012 under the IRS Fresh Start program. These changes increased the minimum lien filing threshold from $5,000 to $10,000 in most cases. In addition, expansion of Streamline criteria that allowed for the 668-Y to not be filed also came into play.

Lastly, we all know that the IRS has been under significant budget pressure for years. The IRS, just like anybody else, must pay a filing fee to the local county clerk and recorder or the Secretary of State in order to file the document. These fees are typically only $15 to $50, but across a million tax liens, that dollar amount really adds up. The Centralized Lien Unit has a budget just like any other government department, and thus they must be judicious about which liens they file and which they don’t.

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All these factors lead to a steady decline in the number of tax liens that we see.

This obviously impacts the number of federal tax liens that are available for us to collect, and it directly impacts your ability to do marketing. Here are a few marketing tips to help you address this particular issue:

1). Make better use of the tax liens that are filed. Too many tax resolution practitioners fail to maximize the effectiveness of their mailing and call lists. The single biggest mistake is only mailing one time. Do multi-hit marketing campaigns, or don’t do them at all, as it will simply be a waste of money. Also, reach out through multiple channels. Send mail AND make phone calls, not just one or the other. Do phone appends on liens to find additional phone numbers, and consider even doing email appends and sending personalized emails to those few liens that will come back with an email address.

2). Branch out with STATE tax liens, not just federal. Oftentimes, state revenue departments can file a state tax lien at no charge with the necessary in-state agencies. People that owe the IRS also often owe their states. Tax Liens HQ does not currently pull state tax liens, but we can do so on a case by case basis. If this is something your business would be interested, contact us with the jurisdiction of interest. Please note that there would be an additional charge for this service.

3). Look beyond tax lien marketing. No business should have a single source of clients. You never know what will happen to the one marketing strategy you use. Government regulations, problems like this decreasing federal tax lien filing volume, etc. could severely impact your business if you only have one source of new clients. Become a student of marketing, and expand out to embrace at least three different lead generation strategies that are independent of each other. For example, look into buying leads from various vendors (just search on Google), create a referral strategy, test broadcast media and PR strategies, advertise on social media platforms, etc.

By making better use of the federal tax liens that are filed, and embracing additional marketing strategies, your business can not only survive, but thrive in spite of this IRS lien issue.