Tax Attorney: Taxpayers contended that the IRS abused its discretion in sustaining the second notice of Federal tax lien because they were negotiating an offer-in-compromise when the lien was filed. The notice was filed after the IRS assessed the taxpayers' liabilities, gave notice and made demand for payment, and after it returned their proposed offer because they failed to provide supporting documentation. Oliver W. and Harriet S. Williams v. Commissioner. Dkt. No. 3000-06L , TC Memo. 2007-162, June 21, 2007. This case is interesting because it implies that the IRS cannot file a notice of lien when an offer in compromise is being actively considered by the IRS. The Tax Court noted:

The Federal Government obtains a lien against "all property and rights to property, whether real or personal" of any person liable for Federal taxes upon demand for payment and failure to pay. Sec. 6321; Iannone v. Commissioner, 122 T.C. 287, 293 (2004). The lien arises automatically on the date of assessment and continues until the tax liability is satisfied or the statute of limitations bars enforcement. Sec. 6322; Iannone v. Commissioner, supra at 293. The notice of Federal tax lien is filed with the appropriate State office or other government office in order to validate the lien against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor. See sec. 6323(a); Lindsay v. Commissioner, T.C. Memo. 2001-285, affd. [2003-1 USTC ¶50,307] 56 Fed. Appx. 800 (9th Cir. 2003).

The Commissioner "may" withdraw a Federal tax lien pursuant to section 6323(j)(1), but respondent's failure to do so in this case is not an abuse of discretion. See Crisan v. Commissioner, T.C. Memo. 2007-67; Ramirez v. Commissioner [Dec. 56,102(M)], T.C. Memo. 2005-179; Stein v. Commissioner , T.C. Memo. 2004-124.