Struggling taxpayers hurt by IRS collection practices

National Taxpayer Advocate Nina E. Olson found that IRS collection practices are harming financially struggling taxpayers without producing significant revenue gains according to her annual report to Congress released Wednesday.

Olson also concluded that increased demands on the IRS have eroded the agency's ability to meet taxpayer service needs. But she did pat the IRS on the back for its success in implementing significant legislative changes designed to stimulate the economy in the middle of the filing season.

How is the IRS harming taxpayers? She says IRS lien filing policies creates serious problems for taxpayers. Over the past decade, the IRS increased its lien filings by nearly 475% – from about 168,000 in FY 1999 to nearly 966,000 in FY 2009, yet overall inflation-adjusted collection revenue declined by 7.4% during this period.