The Treasury Inspector General for Tax Administration (TIGTA) recently released a report titled “Fiscal Year 2026 Statutory Review of Compliance with Notice of Federal Tax Lien Filing Collection Due Process Procedures.” (Audit Report No. 2026-300-056)
As described by TIGTA, on the first Form 668(Y)(C), Notice of Federal Tax Lien (NFTL), filed for each tax period, the IRS must notify the taxpayers at their last known address, within five-business days of their right to a CDP hearing before the Independent Office of Appeals.
Auditors performed a systemic review of the population of 120,235 NFTLs filed during a one-year period to determine whether the required lien CDP notice was mailed timely. “We found that the IRS substantially complied with the legal requirements,” TIGTA said.
An analysis revealed that for six taxpayers the IRS did not mail the CDP notice within the five-business day mandate. This delay was attributed to manual errors by revenue officers and a malfunction of an Automated Lien System server.
A review of a statistically valid random sample of 120 of the total number of NFTs filed “verified that the content of the notices complied with the law, including compliance with the legal requirement to send to the taxpayer’s last known address.
Concerns were raised during a review of procedures for filing NFTLs in cases where taxpayers were in a federally declared disaster area. According to the audit, IRS procedures require collection activity to be suspended in these areas after the IRS’ Disaster Program Office issues the applicable disaster relief memorandum. Auditors identified 202 taxpayers that were sent an NFTL after the disaster declaration date, but before the designation suspending NFTL filings was added to the taxpayer’s account to prevent collection actions. It took the IRS more than two months to add the appropriate designation suspending NFTL filings to the files, the audit noted.
“When the IRS files an NFTL on a taxpayer in a disaster area, it places undue burden and stress on those taxpayers and may impact the taxpayer’s ability to sell their property or get credit to repair their property,” TIGTA stressed.
Take your tax and accounting research to the next level with Checkpoint Edge and CoCounsel. Get instant access to AI-assisted research, expert-approved answers, and cutting-edge tools like Advisory Maps and State Charts. Try it today and transform the way you work! Subscribe now and discover a smarter way to find answers.
