Fed Tax Lien - IRS Filing Requirements

Fed Tax Lien - Rules Of Filing FTL's

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Question or Topic

What rules must IRS follow in filing a federal tax lien (FTL)?

See also:

Tax Lien Warning - Drve v. US

Tax Lien - Gen Info & Intro

Fed Tax Liens - Forced Release

Fed Tax Lien - IRS Filing Requirements

Fed Tax Liens - Requesting Release

Federal Tax Liens - IRS Pub 1450

The Answer

From IRS Handboodk - Instructions to Revenue Officers: 105.1] 2.5.2 (09/26/96) When NOT to File a Lien 1.Do NOT file a Notice of Federal Tax Lien when: A. The liability has been paid, is not correct or credits are available to fully satisfy it. B.Bankruptcy has been filed. C.The taxpayer is a defunct corporation (unless assets are about to be liquidated). D.The taxpayer corporation has gone through liquidation. E.An IMF taxpayer promises to full pay within 6 months (ACS only). F.The taxpayer is deceased and there are no assets to be liquidated. G.The taxpayer lives abroad and there are no known assets in the United States.
1.	Before the IRS files a Notice of Federal Tax Lien: the IRS must assess the liability the IRS must send the taxpayer a notice and demand for payment the taxpayer must neglect or refuse to fully pay the liability within 10 days of notice and demand.

2.	The IRS will issue a Release of the Notice of Federal Tax Lien within 30 days after the taxpayer satisfies the tax due or within 30 days after the IRS accepts a bond guaranteeing payment.

3.	A lien will release automatically if the IRS does not refile the lien before the time expires to legally collect the tax--usually a period of 10 days.

4.	A taxpayer may sue the Federal government for damages if the IRS knowingly or negligently fails to release a Notice of Federal Tax Lien provided the taxpayer first exhausts all administrative appeals within the IRS and the suit is filed within 2 years from the date the IRS should have released the lien.

5.	Each application for a discharge of a tax lien releases the effects of the lien against one specifc piece of property. A Certificate of Discharge will be issued if the taxpayer has other property, subject to the lien, that is worth at least two times the total of the tax owed, plus any additions to the tax owed and any other debts owed on the property (e.g., a mortgage).

6.	A Certificate of Discharge will be issued if the IRS receives the value of the government's interest in the property and taxpayer is giving up ownership. A Certificate of Discharge will also be issued if the property in question is sold and there is a dispute as to who is entitled to the sale proceeds, and the proceeds are placed in escrow while the dispute is being resolved.

7.	The IRS must withdraw a filed Notice of Tax Lien if the notice was filed prematurely or not in accordance with IRS procedures.

8.	The IRS must withdraw a filed Notice of Tax Lien if the taxpayer has entered into an installment agreement to satisfy the liability.

9.	The IRS must withdraw a filed Notice of Tax Lien if the withdrawal will facilitate collection of the tax or if the withdrawal would be in the best interest of both the taxpayer (as determined by the Taxpayer Advocate) and the government.

10.	A lien is incorrect and may be appealed if: the taxpayer paid the entire amount owed before the lien was filed the IRS assessed the tax and filed the lien when the taxpayer was in bankruptcy and subject to the automatic stay during bankruptcy the IRS made a procedural error in making an assessment the statute of limitations expired before the IRS filed the lien.

Solutions are dependent upon facts & circumstances, law and the objectives. These elements vary from one time to another, from one circumstance to another and from from person or entity to another

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