On the old tax lien database system, we got a lot of questions pertaining to why only so many liens were available for a given set of selection criteria. This is a very good question, and I will attempt to answer it here.
First and foremost, one must understand that liens are a finite resource. In other words, there are only a limited number of them. In 2010, the IRS filed 1.1 million Notices of Federal Tax Lien (NFTL). The vast majority of these liens were against individuals owing less than $10,000.
In Fiscal Year 2012, the IRS only filed 707,000 tax liens. That’s for the entire United States.
In 2013, the IRS only filed 602,005 tax liens.
So, the number of lien filings is going down. As of March 2012, the IRS changed the threshold for filing a lien, raising it from $5,000 to $10,000. Anybody with a lien filing less than that amount is a repeat offender, and is pyramiding their tax debt liability.
Let’s go back to that 707,000 liens filed in 2012. Keep in mind that, under most circumstances, we don’t collect lien data on liens less than $5,000. Therefore, those smaller liens won’t even be in our system, and those liens (for repeat offenders that are growing their tax debt) are usually only a couple thousand dollars.
Last year (2012), we collected data on about 250,000 federal tax liens. Since these liens are mostly $5k and above, this represents new tax debtors.
Think about a business that owes 941 taxes, and has for years. They could owe a total of $80,000, and are growing that by several thousand dollars each quarter. 941 debtors represent about 40% of all new debtor lien filings, but these same folks also have an additional 1 to 4 liens filed against them per year. When you have one existing debtor with up to 4 new liens filed per year, that’s a significant portion of the “missing” liens we’re not collecting.
Also consider your search criteria. If you are only searching for liens above $25,000, for example, then you’re simply searching above the range at which most tax liens are filed. In other words, there are simply fewer tax debtors that owe more than $25,000, in comparison to those that owe less than this amount. The percentage distribution in our system is skewed high because we cut off at the $5,000 mark, but even at that, liens greater than $25k represent about 42% of our database. Only 20% of our database exceeds $50,000 of tax debt, and about 12% exceeds $75k.
Some additional reasons why lien counts are lower than you expect:
- It’s quite possible we simply don’t collect data in certain areas. For example, most of PA, MT, and WY we are simply unable to collect. We may not collect the data because it’s either not readily available, we don’t have the resources to procure the data, or simply because nobody buys it from us, and thus we don’t collect it.
- Liens are filed in proportion to the population of an area. If you are only looking for liens in a small area (such as one ZIP code), there are simply fewer available than if you expanded your geographical area.
- If you are looking only looking for liens with phone numbers, bear in mind that we obtain phone numbers for about 72% of the business liens in our database. Also, if you are looking only for 1040 leads with phone numbers, remember that we no longer make special effort to find phone numbers on 1040 leads. If you want 1040 phone numbers, you must use a phone append service to obtain them.
- Most liens filed are LESS THAN $10,000. Most tax resolution firms want liens higher than this, since tax debts under $10k can be settled with a GIA quite simply, and therefore often are not worth trying to sell services to (although I personally disagree with this logic, but that’s the subject of a different post).
- You should also be aware that our duplicate prevention system works differently than other companies. If a particular business has a NEW lien filed against it when and OLD one already exists, all the other companies will count that as a “new lien”, because technically it is. However, based on much feedback from our customers, we THROW OUT that newly filed or updated lien as a DUPLICATE, because most of our customers have told us that they don’t want to pay for the same lead information twice. Even if the new lien is filed, they already have the OLD lien information in their lead files, and by the time the new lien gets filed, they will often already be contacting the old lead they already purchased again anyway as they “recycle” old liens through their sales cycle. With this said, it should be noted that many businesses are serial tax debtors, and therefore a significant number of business lien filings are against repeat offenders, and therefore get “duped out” of our system.
- If you are used to purchasing liens from INFT or a few other companies, many of them don’t even give you the OPTION of selecting a lien date to start from. They fill your order by starting from today and working backwards to find the liens that match your criteria, and go back as far in time as they have to in order to fill your minimum order. We don’t do that. Our system starts from today and only goes back as far as you tell it to. In other words, your order isn’t filled based on how much money you have in your account or how many liens you’ve asked for — it’s filled based on the limits of your criteria. Our data collection staff only gathers liens that have been recorded within the past 7 days, which causes us to miss data sometimes. Our entire company mission is to provide fresh data — we do not maintain archival lien records, as there are plenty of other companies that do, and it is not those companies which we consider our competition.
- Lastly, keep in mind that recently lien filings are slowing down. This is due to two factors. One, the IRS recently announced that they were increasing the minimum debt amount for automatic filing of a lien. Also, the IRS’s budget recently experienced a significant shift, with resources pulled away from certain departments and reallocated to other departments, such as Revenue Officer hiring for collections enforcement. The IRS is getting backed up on the filing of liens (remember, it costs them money to file a lien with the county or state) as the budget for that activity has decreased. And finally, there is a seasonal lull in tax filings during the tax preparation season. Lien filings will pick up as those returns are processed and the tax bills on those returns go unpaid throughout the summer. Far more liens are filed in the second half of a calendar year than in the first half.
Hopefully these points will clear up some of the questions that many of you have regarding data counts. For a small number of you that are looking for data in very specific areas, there is also the fact that we may simply not cover your area. For many more rural areas of the country, we may not collect data at this point due to lack of customer interest in coverage for that area, or simply because the data is unavailable through public records. We are always working to expand our coverage, but it is impractical for us to cover all 3,200 United States counties.