New insights on IRS lien and levy removal
Removing IRS Liens And Levies
by Barry Smith legalbearatlegalbears.com
Hi, this is Barry Smith. I am writing to tell you about some of my recent research respecting removing liens and levies. If you would prefer to hear this rather than read you can listen to a recording of this at www.irslienthumper.com.
I have discovered what amounts to a needle in a haystack. I have discovered somebody in the IRS that is motivated to take some action on your behalf. You can send your legal argument to this person respecting why the IRS should remove your lien or levy and he will do something more with it than just put it in the file like some administrative assistant.
So many people have sent letters to the IRS and gotten no response. It is as if no one ever reads it.
My own personal story with respect to the IRS is that I purposely trashed my credit because I found out that they were looking in the credit report to find out everything about me. I did not like them learning so much about me from my credit report, so, I put a stop to that. I went outside the system. I did not have a bank account, I never owned any property, and that pretty much solved my IRS problems.
The IRS agent chased me hard after I defaulted on three payment agreements. They interviewed neighbors, knocked on the door, called the house, liened and levied and did every kind of thing they could think of to collect what they asserted was my outstanding tax debt. They never go a cent.
I turned my attention to studying other legal issues. I discovered a group of people who would get together one time a week in the Denver area and talk about their cases and try to help each other; we were learning law. I would go down there, and I’d get up and talk to the group about whatever my research project was for the week.
Early in this two years the Creator of the universe instructed me to get a computer and learn how to use it and start studying law full time. I estimate for 10 years I studied law about 40 hours a week. For the last five, I have not been studying 40 hours a week, but I have been very actively involved in law in general.
I would go to those law meetings every time they had a meeting. I would get up and I would talk about whatever I was researching that week, my new law discoveries. Originally, my thoughts on the IRS were, oh, IRS that is a big fight and I am going to have to learn how to do law just so I can fight with the IRS. They lost interest in me because I did not have a job and did not own any property and did not have any income; so they were not the problem I anticipated they would be. I turned my attention to unjust judges and corruption in police and that kind of thing.
One day, somebody who came to those meetings on a regular basis approached me. He was an older man. He asked me if I would help him get a levy off his significant other’s retirement pay.
I told him I was willing to help him, but I was not willing to help him if he was going to expect me to just grab the latest law guru’s legal theories, and run with that. I told him, look, I am going to have to figure this out from scratch. He agreed to that.
I worked on his project for several months. I mean, I read many cases where people tried to sue the IRS under all kinds of different theories. They tried to sue them under Bivens v. Six Unknown Federal Narcotics Agents. They tried to sue them under 42 USC §1983 for civil rights violations many other kinds of tactics. The courts were just dismissing them out left and right.
I could not find anybody that was winning a thing against the IRS. Finally, I read one of these cases and the judge was saying in his opinion, you know what, your remedy is over in 26 USC § 7433 and 26 USC § 7432.
I looked those statutes up. It turns out that, back in 1988, in the Taxpayer’s Bill of Rights, the United States waived sovereign immunity and made it possible for someone to sue when IRS agents fail to follow the statues or the regulations that are on the books when they are involved in tax collection activity. Section 7432 made it possible to sue when the IRS refuses to remove a lien that is legally unenforceable.
Then, I took that and I looked up all the cases that cited to that statute. Eventually I ended up with 38 cases. I went to reading through those and almost all of them were losses. The primary reason they were losing is that in order to get the Waiver of Sovereign Immunity, you have to send them a letter noticing them of your intent to sue and telling them why and most of the litigants had failed to send the letter.
At that time, you had to send a letter to the District Director; attention: Chief of Special Operations. That has changed now. The IRS has Area Directors and, instead of the Chief of Special Operations, they now call them Technical Compliance Officers.
If you want this waiver of immunity, you have to send a letter in laying out why you want to sue the U.S.
I went to work on the letter for this man. Pretty soon I had a ten page double‑spaced letter that laid out the different reasons why it was illegal for them to levy this retired teacher’s pay and noticing them according to the regulation why she would be suing them.
I sent that over to my friend who was having me do this. There was some delay and finally he got around to sending it in.
The two of us talk whenever we see each other at the meeting and then various other times. Several months passed and one day, just completely in passing, he says, “Oh, by the way. That letter that you wrote worked.” I said, “Really?” He says, “Yeah.” He says, “In fact, it worked twice.” He says, “They released the one on her retirement pay, and then they had threatened to levy on a different year on the retirement pay as well, and they never executed on that levy.”
Of course, I thought that was great. I was a little stunned that there wasn’t a phone call and a victory party held or something. Instead, he was like, well, yeah, it worked.
I put the statute, the regulation, the 38 cases along with the first letter I wrote into a package and called it the Calling Off the Dogs Package. The reason I call it the Calling Off the Dogs Package is because that guy, what used to be known as Chief of Special Operations and is now known as the Technical Compliance Officer, he has the authority to call off the dogs (that would be the IRS collections people J).
What was 38 cases has now grown to 106 cases because I keep going back and checking the case law and looking for the new decisions that have come out with respect to these statutes, 26 USC 7432 and 7433.
I have had people sit and read some of those cases. They call me up; they go, “These are all losses.” Some people tell me, “Well, just tell me the winners. I only want to read the winners.”
There’s a scripture in Proverbs, Chapter 21, Verse 11. It says this, “Men of righteous wisdom and good sense learn by being instructed.” What I tell them is, “You know what? The reason you’re reading those cases is to find out what the other people did wrong so that you don’t make the same mistake.”
Now, let’s talk about what it is that’s motivating this Technical Compliance Officer in the Area Director’s Office. Why does he want to do something for someone that sends him a letter under this procedure? I think there are a number of reasons. One of them is because the federal courts are overloaded.
One year I went down to federal court early in the year, January or something like that, and I filed a lawsuit. I was assigned a case number comprised first by the year, so it was like ‘96, and then the judge’s initials followed it, so in this case, it was BA for Babcock, and then it was followed by the number of the case that it was that year; like 256 or something.
I went back later in the year, like November, and I filed another lawsuit. Again, it got ‘96 for the year. It went to the same judge, so it got again the same middle initials. And then, the number that followed it was 2,500.
Think about that. A single federal judge in one year is getting, typically, in a state like Colorado , more than 2,500 civil cases assigned to him and that does not include his criminal docket. One trial judge, District Judge Bertelsman, addressed this issue in an opinion he authored by saying:
Having experienced in the past the stoney-hearted indifference with which the prosecutors usually received the court’s tearful entreaties concerning the state of its civil docket and the plight of those litigants unfortunate enough to have cases moldering there, the court decided to take unilateral action to keep the trial of this case within reasonable bounds. U.S. v. Reaves, 636 F.Supp.1575 (E.D. Ky. 1986).
Don’t forget, that 2500 cases is just what came in this year. There’s a large portion of what came in last year that are still waiting to come up for trial, in the middle of doing discovery, people filing motions, whatever, from last year. I’ve heard stories about some cases that have been on the dockets - active cases - for up to seven years.
A federal judge might have, who knows, 7,000 cases going at once. I do not know if you have ever litigated, but I mean to tell you, it is a challenge just to keep track of two or three, as far as what is supposed to be happening on any given one. Federal judges are swamped.
The next thing that I know about the overburdened courts is that they did a study with respect to federal courts. The study showed that in the United States , they need 500 more courts, judges, and magistrates, to work with them as support. Calculate that out. Every single state needs 10 more courts, except for Wyoming and Utah and New Mexico etc. So then, that must mean some states need 15 more judges and courts.
Put on top of that the fact that this is causing an acknowledged crisis in federal courts. I was down at the law library and I was looking at United States Code Annotated. There is a single volume in that set of books that is devoted entirely to the judicial emergency.
I got to looking in that book and the chief appellate court judge was saying here is how we are going to deal with the President having failed to appoint judges and the Senate’s failure to confirm judges. We have vacant seats that we do not have judges to fill. Here is what we are going to do. We are going to send people down from the court of appeals to hear trials, and we are going to send people up from the district courts to hear appeals, and we are going to, etc. There were all these instructions about how they were going to shuffle things around.
Another thing happened - and this has to do with U.S. attorneys. If you file a suit against the United States for something the IRS did, it is going to be the U.S. attorneys that are going to jump in there and defend them.
I am down there in the federal court clerk’s office one day, and in comes somebody and they’re carrying with them what looked to be a foot and a half thick pile of paper. They set that pile of paper on the counter and the clerk comes over, hefts it up, and starts carrying it away. I go “What is that?” She says, “Oh, that’s the U.S. Attorneys’ filings for the day.” I told her, “Man, you need a cart.” She replied, “No kidding.”
That should tell you about the status of the U.S. Attorney. I do not care that it is the United States ; the U.S. Attorneys have all the litigation that they can handle.
There is another reason why I think the Technical Compliance Officer, is motivated to do something about a letter that you send him threatening to sue. I have learned that when officials feel personally uncomfortable, that they take and use their official capacity to make themselves feel better.
I think what happened is prior to the 1988 Taxpayer Bill of Rights or whatever, people would show up at their Senator or their Congressman’s office, they are a constituent or whatever, and they have a complaint about something the IRS did. Most of us have complaints about the IRS that are enough to curl your hair.
Anyway, these Congressmen and Senators do not like their constituency showing up at the office with their complaints. What they did is they all huddled up and said to each other, we had better pass a law so these people have somewhere to go besides come to us and complain; you know how uncomfortable that makes us. Not only that, but it consumes our time when we have to write letters and call the IRS on their behalf. Therefore, they passed statutes like §7433 and §7432, just looking to make themselves feel better.
It is my opinion that they told that Technical Compliance Officer; you do what it takes to keep these people from filing lawsuits because the courts are already overcrowded.
There is still another reason that the IRS is motivated to do something for you; in the 1978 Supreme Court decision of Butz v. Economou Justices Rehnquist, Stewart, and Stevens, concurring in part and dissenting in part said this about the head of a federal agency, “If, for example, [the head of a federal agency] may never know until inquiry by a trial court whether there is a possibility that vexatious constitutional litigation will interfere with his decision making process, the Secretary will obviously think not only twice but thrice about whether to prosecute a litigious commodities merchant who has played fast and loose with the regulations for his own profit. Careful consideration of the rights of every individual subject to his jurisdiction is one thing; a timorous [timid; showing fear or hesitancy] reluctance to prosecute any of such individuals who have a reputation for using litigation as a defense weapon is quite another. Since Cabinet officials are mortal, it is not likely that we shall get the precise judgmental balance desired in each of them, and it is because of these very human failings…” So, because of human frailties’, even the heads of federal agencies give thought to whether you will sue when making decisions.
So, here comes your credible threat to sue in the form of a letter. The Technical Compliance Officer looks down through there and he goes, what would make more sense, have a lawsuit, or do something for this person? The next thing you find is that they release the lien or levy.
I’ve been selling this package, the Calling Off the Dogs Package, and also suits to remove unlawful liens for something like eight years now. In eight years - maybe it’s longer than eight years - I have never had anyone contact me back and, one, say you know what? What you sold me was a rip off. Or two, I’ve never had anyone contact me back and say what you sold me didn’t work.
I have another story. This older man contacts me. He wants to know about the removing levies package. He is retired and the IRS is levying his Social Security. He decides to get the package.
The next thing that happens is I get a barrage of emails from this man that are full of questions related to his inability to look up the statutes and regulations that I quoted in the letter I wrote that comes with the package and he can’t find them. So here comes his emails. They are saying things like, “Well, I can’t find that thing that’s in your letter; I can’t find that statute; I can’t find that regulation. I can’t--.” What his emails are telling me is that this man does not know much about how to do legal research.
Eventually, I stopped getting emails from him like that. We had kind of become friends, and so we had a number of conversations about different topics over the phone. We both enjoy studying the Scriptures.
We are talking on the phone one day, and just in passing he says, “Oh, by the way, ever since I sent that letter in, I’ve been getting a full Social Security check.” He just told me that in passing. I guess people just expect that what they ordered is going to work and when it does, then they go, “That’s what it’s supposed to do.”
Part of my package is the first letter that I ever wrote that worked. That letter is nothing more than a sample. That letter is not a boilerplate. Do not take and put your name on the top of that letter and send it in, because some of it only applies to retired teachers. You need to write your own, individual, personalized letter.
Think about this; if 100 people grabbed the letter I wrote, put their names on top it and sent it in before you did, by the time your letter gets there the technical compliance officer will recognize that is a form letter and will already have a response formulated. He will also already suspect that the people sending these are not a credible threat to sue.
There are people who have seen the first letter I wrote, and they go, “Man, those arguments are weak. The IRS addresses some of those on their web page and calls them frivolous.” I have had a couple people say that to me. I reply back, “You know what? You need to call up that Special Operations Officer and tell him that he made a mistake.”
Now, the package includes a second letter written by a former attorney that currently specializes in fighting the IRS. This letter also had success; but, I think the success was in obtaining injunctive relief as part of a suit.
Here is what this package consists of. This package is not me telling you what the perfect argument is to get every lien and levy removed. This package starts with the assumption that you have been doing research; that you have been studying; and that you know some error or some mistake that they made where they failed to follow the regulation or the statute; or, they wrongly interpreted the statute or the reg. Maybe they made the levy apply to you that does not really apply to you because you’re not a resident of Washington D.C. , Guam, Puerto Rico , or whatever.
If you need help coming up with arguments to put in your letter/notice of intent to sue, you have to option of ordering an arguments package I put together respecting levies as well.
Everybody that is going to read or listen to this is going to have some thought about why what happened to him or her from the IRS is illegal. Some people they levied more than 15 percent allowable by the statute; maybe they are taking all but $100. All you would have to do is just find the statute where it says the max they can take is 15 percent and put it in the letter threatening to sue and you send it off. The optional arguments package includes this statute. Also, to help you figure out arguments as to why your lien is legally unenforceable, I put together a free lien evaluation webpage at www.cantheydothat.com that applies to all liens that were placed after 1998.
Some people, the IRS never send you the notice required by the lien and levy statutes. There are all these requirements about the notices they have to send and they never sent them. You put the fact that they never sent you a notice in the letter.
Also in included in the package is report by the Treasury Inspector General reviewing IRS compliance with the statutory lien process. This report tells you right where to look for the issue that will render your lien “legally unenforceable;” which states that, “The IRS did not completely comply with the law.” respecting the lien process. This reports states that the IRS did not mail the lien notices timely as required by the Internal Revenue Code 95% of the time. In addition, they found instances where the IRS could not provide proof of timely mailing. The report notes that the IRS had made changes but that those changes, “…showed no improvement in mailing lien notices more timely.” This means that there is a technical defect in more than 95% of the liens that have been placed since the Reform & Restoration Act of 1998. The Treasury Inspector General acknowledges this in the report by saying in his recommendations, “We recommended the Director, … consult with the Office of Chief Counsel to identify any actions necessary to correct the potential
legal violations we identified in this audit.” I have included a copy of this audit report in the package. In the package I also include the section of the code that imposes the 5 day notice requirement.
I also was able to locate a US Supreme Court decision when applied to the situation, kicks the IRS’s butt for missing this congressionally mandated deadline and included it in the Lien Thumper package.
In the course of my research, I found a section of the Code that states, “The Secretary may withdraw a notice of a lien filed under this section and this chapter shall be applied as if the withdrawn notice had not been filed, if the Secretary determines that the filing of such notice was...not in accordance with administrative procedures of the Secretary…” This sounds exactly like what I have been talking about on this email; so, I made a copy of the statute and included it in the package. If you point out how the Secretary’s administrative procedures have not been followed and they refuse to withdraw the lien it would seem to me that you could drag the Secretary or his delegate before court on a mandamus petition under 28 USC 1361 to compel an officer of the United States to perform his duty. Of course, let the court tell you that they are not officers of the United States . I suspect that will not happen. I have not included anything on how to do that in this package. However, I have included a sample letter that you can customize to fit your situation and send in demanding the withdrawal of the notice of lien. This sample letter is based on the Regulation which explains what a written request for the withdrawal of a lien must include. That Regulation is also included in the package. And just to rub it in, this statute and regulation require the IRS to notify the credit reporting agencies and the creditors you list of the withdrawal of the lien.
Based on one lien that I recently examined the IRS may be not sending the due process notices timely but may be putting dates on the notices that make it appear that they were sent timely. I read a case describing how the certified mail records are maintained and processed by the Post Office and the IRS. A copy of that case is included in the Lien Thumper package. From that case I learned exactly what Postal Form to ask for in a Freedom of Information Act request in order to determine the exact date the notice was placed in the mail and whether the IRS has done what I suspect. That FOIA is included in the Lien Thumper package.
Also in the Lien Thumper package is the form to use to ask for this information through the Post Office.
It occurred to me that there was probably a regulation that went with the section of code that imposed the 5 day requirement. I didn’t have to search to long and I found it. Down in the question and answer section of the regulation I found this question: “Q What if the taxpayer does not receive the Collection Due Process Notice because the IRS did not send that notice by certified or registered mail to the taxpayer's last known address, or failed to leave it at the dwelling or usual place of business of the taxpayer, and the taxpayer fails to request a Collection Due Process hearing with Appeals within the 30-day period commencing the day after the end of the five business day notification period?” and surprise, surprise; does the IRS think they violate the law when they completely fail to deliver the notice…of course not! The answer to this question says: “A Notice of Federal Tax Lien becomes effective upon filing. The validity and priority of a Notice of Federal Tax Lien is not conditioned on notification to the taxpayer pursuant to section 6320.” I think the Treasury Inspector General disagrees with this position calling failure to send the notices timely “potential legal violations.” The answer continues, “Therefore, the failure to notify the taxpayer concerning the filing of a Notice of Federal Tax Lien does not affect the validity or priority of the Notice of Federal Tax Lien. When the IRS determines that it failed properly to provide a taxpayer with a Collections Due Process Notice, it will promptly provide the taxpayer with a substitute Collections Due Process Notice and provide the taxpayer with an opportunity to request a Collections Due Process hearing.” It is at this hearing, if you elect to, that you will kick their ass or, set up issues for judicial review.
Remember, in 1821 the U.S. Supreme Court said in Thatcher v. Powell that no public officer can take any action affecting your property “…unless authorized so to do by express law, …and that the person invested with such a power, must pursue with precision the course prescribed by law, or his act is invalid…” This entire decision appears on www.cantheydothat.com, my free lien evaluation page.
So, if you notice them that they failed to timely send you the Collections Due Process Notice required by statute, they may send you a new notice and give you an opportunity schedule a hearing. It is my opinion that you want to go to that. I overheard one of my favorites when it comes to fighting the IRS, Dr. Robert Clarkson, the former attorney, tell somebody over the phone in his South Carolina drawl respecting a collection due process hearing, “We’ll keep ‘em tied up for years.” My position on that would be, if he can, so can you.
Another reason I say that is that you will have an opportunity to expose them in such a manner that the issue is preserved for review by the courts. I have learned that there is a form to request the hearing. I have included a sample of one in the Lien Thumper package. On that form you must tell them what issues you intend to raise at the hearing. This sample form raises an issue dear to the IRS’s hearts; the definition of income. This sample form quotes from 26 different Supreme Court decisions in which the federal tax collector lost! How can they claim to be so right on the issue of income when they have already lost so many times on the issue in the highest court in the land? I also include another case in the package wherein the Supreme Court states, “We must reject in this case * * * the broad contention submitted in behalf of the Government that all receipts -- everything that comes in -- are income within the proper definition of the term "gross income…”
What this package is, it is a delivery system. It is a bow and it is an arrow. You take your arguments, put them on the tip of the arrow in the form of a letter, a notice of intent to sue, and you shoot it at that Technical Compliance Officer, the motivated target.
This package is a tool or a weapon. As with any tool or weapon, this research package will be as effective as the hand that wields it. In this package I do all that I can to help make you effective. There is really no point in calling me up and asking if the package is effective; or, asking how effective it is. If you ask me this sort of question, it is coming right back at you; I will want to know, how effective are you?
So, if the Technical Compliance Officer wants to stop you from filing a law suit, then he’s going to figure out a way, a reason, to call up those IRS agents, whoever they are that’s hassling you, and tell them, you guys leave this person alone because they’re threatening to sue and we don’t need any more lawsuits.
It is my position that the same principle that has worked for levies will work for liens. The important concept that is true for both liens and levies is that the Technical Compliance Officer is trying to keep you from suing; you take this bow and this arrow, if you’ve got liens, then you’re going to be using the 7432 process. You are going to have to shoot two arrows. First, you are going to have to shoot an arrow based on 26 USC 6325 and you’re going to have to demand that they remove the lien and tell them why they have to remove it. The regulation for § 6325 is included in the package and it tells you where to send this letter.
Secondly, they are going to remove the lien, refuse to remove the lien or else they are going to take no action, and then the statute says that if they fail to take action after so many days, then, under §7432, you can send your notice of intent to sue. What you’re going to do in your letter under §7432 is you’re going to have to write, “I sent a demand to remove the lien under §6325 and they refused to remove it, so many days passed, and they never responded--,” or whatever the statute and regulation require. Then you say, “This is my notice of intent to sue per your refusing to remove the lien.” Now you are going to shoot it at the Technical Compliance Office. Then you are going to wait to see what they do. Both of these concepts are going to work the same; liens are a two-step process; levies are a one-step process. When I say that, I am not talking about the withdrawal of lien process that I have discussed previously. That is a separate issue that I would think you would want to take advantage of because it gives you one more chance to get your lien off by simply writing a letter.
Based on my research, which shows that sometimes they won’t do anything for you until you file suit, you cannot say that the process does not work until you have filed suit.
Listen to what I found looking through the case law on Suits for Unlawful Tax Collection. I found these collateral wins. In every single one of these cases, something bad is happening in the actual 7433 suit. The suit is being dismissed out, they are finding whatever is wrong with it, etc.
Here are seven collateral wins that I found in the case law I collected into these packages. These are all after the suit was filed:
Mrs. Shaw received a refund of all the money collected, and the remaining tax liability was abated. Shaw v. U.S. , Fifth Circuit.
After filing one of these suits, the government dismissed the criminal action against the 7433 plaintiff. Fishburn v. Brown, Sixth Circuit, 1997.
After filing one of these suits, the IRS returned a seized Cadillac. Washington v. U.S. , Ninth Circuit, 1992.
After filing one of these suits, “The propriety of the defendant’s calculation of the plaintiff’s tax liability,” (so the defendant would have been United States , all right?) Their calculation of the plaintiff’s tax liability “was resolved in the plaintiff’s favor in tax court. Templeman v. U.S. , First Circuit, 1994.
See, there is something that goes on that not everyone understands. That is that the one judge calls the other judge behind the scenes and says, hey, I have this case over here that is related to a case filed in your court, what do you want to do? What are you going to do on your side? Or whatever. They decide behind the scenes what is going to happen to your cases. There is no law against this as far as I know. Doing something like that does not violate the judicial code of ethics or anything like that. So, I think what happened was the 7433 court contacted that tax court and said, hey, do something for this guy so I can dismiss his suit and write in the dismissal that something just was done for the plaintiff.
After filing one of these suits, an injunction restricting state court filings was vacated. Templeman v. U.S. , First Circuit, 1994.
After filing one of these suits, improper
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