IRS May Withdraw Liens to Facilitate the Collection of Tax
If the withdrawal (or non-filing) of a lien will "facilitate the collection of the tax liability," then the IRS is authorized to forego the lien. A lien serves little purpose other than to harass and annoy, if it actually makes collection less likely. If a taxpayer can show he has no assets which the IRS can currently secure by filing a lien, the basis for filing a lien is not as strong.
By filing a lien, the IRS may substantially reduce the chances that a given taxpayer will be able to full pay his tax liability, if the lien will threaten the taxpayer's ability to earn a living. I.R.M. section 126.96.36.199.6(4) states pertinently:
"The Service must exercise good judgment in weighing the risks and deciding whether to subordinate the federal tax lien. The Service's judgment is similar to the decision that an ordinarily prudent business person would make in deciding whether to subordinate his/her rights in a debtor's property in order to secure additional long run benefits."
Recent Tax Court Cases Have Adressed Circumstances "Facilitating Collection"
Recent Tax Court cases have picked up on this logic and have asked Settlement Officers and Revenue Officers to exercise "prudent business judgment" in deciding whether to take collection action, such as filing a lien. See Alessio Azzari, Inc. v. Commissioner, 136 T.C. No. 9, (United States Tax Court, 2011). The operative question is whether filing the lien will "facilitate" collection or will "harm" the IRS's ability to collect.