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-Spencer L. Simons, former Director, O'Quinn Law Library and Associate Professor of Law



Friday, October 7, 2011

Reforming Tax Liens

Professor Danshera Cords of Albany Law School has authored the forthcoming article: Lien of Me: Virtual Debtors Prisons, the Practical Effects of Tax Liens and Proposals for Reform (forthcoming University of Louisville Law Review, Vol. 49, 2011) that discusses the devastating damage done to a person's credit rating and employment prospects by having unpaid tax liens levied by the IRS. According to Professor Cords, such liens do unnecessary damage because they do not improve the chances that the tax amount in question will ever be collected. The author proposes a number of reforms including:

1). Amend the Internal Revenue Code to require a tax lien to be removed from an individual's credit report and treated as if it had never been filed once payment is satisfied.

2) Amend the Fair Credit Reporting Act to require the removal of a tax lien from a taxpayer's credit report after the same period of time that debts from other creditors would have been removed.

3) The decision to issue tax lien notices should take into account whether such notice will increase the chances of collecting the tax debt from the taxpayer.

This article is now available on SSRN.

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