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6325 Regulations | |
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§301.6325-1.,
Release of lien or discharge of property (a) Release of lien (1) Liability satisfied or unenforceable. --Any
district director may issue a certificate of release of a lien
imposed with respect to any internal revenue tax, whenever he
finds that the entire liability for the tax has been satisfied or
has become unenforceable as a matter of law (and not merely
uncollectible or unenforceable as a matter of fact). Tax
liabilities frequently are unenforceable in fact for the time
being, due to the temporary nonpossession by the taxpayer of
discoverable property or property rights. In all cases the
liability for the payment of the tax continues until satisfaction
of the tax in full or until the expiration of the statutory period
for collection, including such extension of the period for
collection as may be agreed upon in writing by the taxpayer and
the district director. (2) Bond accepted. --The district director may, in his discretion, issue a
certificate of release of any tax lien if he is furnished and
accepts a bond that is conditioned upon the payment of the amount
assessed (together with all interest in respect thereof), within
the time agreed upon in the bond, but not later than 6 months
before the expiration of the statutory period for collection,
including any period for collection agreed upon in writing by the
district director and the taxpayer. For provisions relating to
bonds, see sections 7101 and 7102 and the regulations thereunder. (b) Discharge of specific property from the lien (1) Property double the amount of the liability (i)
The
district director may, in his discretion, issue a certificate of
discharge of any part of the property subject to a lien imposed
under chapter 64 of the Code if he determines that the fair market
value of that part of the property remaining subject to the lien
is at least double the sum of the amount of the unsatisfied
liability secured by the lien and of the amount of all other liens
upon the property which have priority over the lien. In general,
fair market value is that amount which one ready and willing but
not compelled to buy would pay to another ready and willing but
not compelled to sell the property. (ii)
The
following example illustrates a case in which a certificate of
discharge may not be given under this subparagraph: Example.
The Federal tax liability secured by a lien is $1,000. The fair
market value of all property which after the discharge will
continue to be subject to the Federal tax lien is $10,000. There
is a prior mortgage on the property of $5,000, including interest,
and the property is subject to a prior lien of $100 for real
estate taxes. Accordingly, the taxpayer's equity in the property
over and above the amount of the mortgage and real estate taxes is
$4,900, or nearly five times the amount required to pay the
assessed tax on which the Federal tax lien is based. Nevertheless,
a discharge under this subparagraph is not permissible. In the
illustration, the sum of the amount of the Federal tax liability
($1,000) and of the amount of the prior mortgage and the lien for
real estate taxes ($5,000 + $100 = $5,100) is $6,100. Double the
sum is $12,200, but the fair market value of the remaining
property is only $10,000. Hence, a discharge of the property is
not permissible under this subparagraph, since the Code requires
that the fair market value of the remaining property be at least
double the sum of two amounts, one amount being the outstanding
Federal tax liability and the other amount being all prior liens
upon such property. In order that the discharge may be issued, it
would be necessary that the remaining property be worth not less
than $12,200. (2) Part payment; interest of (i)
Part payment. --The district director may, in his discretion, issue a certificate of
discharge of any part of the property subject to a lien imposed
under chapter 64 of the Code if there is paid over to him in
partial satisfaction of the liability secured by the lien an
amount determined by him to be not less than the value of the
interest of the United States in the property to be so discharged.
In determining the amount to be paid, the district director will
take into consideration all the facts and circumstances of the
case, including the expenses to which the Government has been put
in the matter. In no case shall the amount to be paid be less than
the value of the interest of the (ii)
Interest of the (iii)
Valuation of interest of (3) Discharge of property by substitution of proceeds of sale. --A
district director may, in his discretion, issue a certificate of
discharge of any part of the property subject to a lien imposed
under chapter 64 of the Code if such part of the property is sold
and, pursuant to a written agreement with the district director,
the proceeds of the sale are held, as a fund subject to the liens
and claims of the United States, in the same manner and with the
same priority as the lien or claim had with respect to the
discharged property. This subparagraph does not apply unless the
sale divests the taxpayer of all right, title, and interest in the
property sought to be discharged. Any reasonable and necessary
expenses incurred in connection with the sale of the property and
the administration of the sale proceeds shall be paid by the
applicant or from the proceeds of the sale before satisfaction of
any lien or claim of the (4) Application for certificate of discharge. --Any
person desiring a certificate of discharge under this paragraph
shall submit an application in writing to the district director
responsible for collection of the tax. The application shall
contain such information as the district director may require. (c) Estate or gift tax liability fully satisfied or provided for (1) Certificate of discharge. --If
the district director determines that the tax liability for estate
or gift tax has been fully satisfied, he may issue a certificate
of discharge of any or all property from the lien imposed thereon.
If the district director determines that the tax liability for
estate or gift tax has been adequately provided for, he may issue
a certificate discharging particular items of property from the
lien. If a lien has arisen under section 6324B (relating to
special lien for additional estate tax attributable to farm, etc.,
valuation) and the district director determines that the liability
for additional estate tax has been fully secured in accordance
with §20.6324B-1(c) of this chapter, the district director may
issue a certificate of discharge of the real property from the
section 6324B lien. The issuance of such a certificate is a matter
resting within the discretion of the district director, and a
certificate will be issued only in case there is actual need
therefor. The primary purpose of such discharge is not to evidence
payment or satisfaction of the tax, but to permit the transfer of
property free from the lien in case it is necessary to clear
title. The tax will be considered fully satisfied only when
investigation has been completed and payment of the tax, including
any deficiency determined, has been made. (2) Application for certificate of discharge. --An
application for a certificate of discharge of property from the
lien for estate or gift tax should be filed with the district
director responsible for the collection of the tax. It should be
made in writing under penalties of perjury and should explain the
circumstances that require the discharge, and should fully
describe the particular items for which the discharge is desired.
Where realty is involved each parcel sought to be discharged from
the lien should be described on a separate page and each such
description submitted in duplicate. In the case of an estate tax
lien, the application should show the applicant's relationship to
the estate, such as executor, heir, devisee, legatee, beneficiary,
transferee, or purchaser. If the estate or gift tax return has not
been filed, a statement under penalties of perjury may be required
showing (i) the value of the property to be discharged, (ii) the
basis for such valuation, (iii) in the case of the estate tax, the
approximate value of the gross estate and the approximate value of
the total real property included in the gross estate, (iv) in the
case of the gift tax, the total amount of gifts made during the
calendar year and the prior calendar years subsequent to the
enactment of the Revenue Act of 1932 and the approximate value of
all real estate subject to the gift tax lien, and (v) if the
property is to be sold or otherwise transferred, the name and
address of the purchaser or transferee and the consideration, if
any, paid or to be paid by him. (d) Subordination of lien (1) By payment of the amount subordinated. --A
district director may, in his discretion, issue a certificate of
subordination of a lien imposed under chapter 64 of the Code upon
any part of the property subject to the lien if there is paid over
to the district director an amount equal to the amount of the lien
or interest to which the certificate subordinates the lien of the
United States. For this purpose, the tax lien may be subordinated
to another lien or interest on a dollar-for-dollar basis. For
example, if a notice of a Federal tax lien is filed and a
delinquent taxpayer secures a mortgage loan on a part of the
property subject to the tax lien and pays over the proceeds of the
loan to a district director after an application for a certificate
of subordination is approved, the district director will issue a
certificate of subordination. This certificate will have the
effect of subordinating the tax lien to the mortgage. (2) To facilitate tax collection (i)
In general. --A
district director may, in his discretion, issue a certificate of
subordination of a lien imposed under chapter 64 of the Code upon
any part of the property subject to the lien if the district
director believes that the subordination of the lien will
ultimately result in an increase in the amount realized by the
United States from the property subject to the lien and will
facilitate the ultimate collection of the tax liability. (ii)
Examples. --The
provisions of this subparagraph may be illustrated by the
following examples: Example
(1).
A, a farmer, needs money in order to harvest his crop. A Federal
tax lien, notice of which has been filed, is outstanding with
respect to A's property. B, a lending institution, is willing to
make the necessary loan if the loan is secured by a first mortgage
on the farm which is prior to the Federal tax lien. Upon
examination, the district director believes that ultimately the
amount realizable from A's property will be increased and the
collection of the tax liability will be facilitated by the
availability of cash when the crop is harvested and sold. In this
case, the district director may, in his discretion, subordinate
the tax lien on the farm to the mortgage securing the crop
harvesting loan. Example
(2). C
owns a commercial building which is deteriorating and in unsalable
condition. Because of outstanding Federal tax liens, notices of
which have been filed, C is unable to finance the repair and
rehabilitation of the building. D, a contractor, is willing to do
the work if his mechanic's lien on the property is superior to the
Federal tax liens. Upon examination, the district director
believes that ultimately the amount realizable from C's property
will be increased and the collection of the tax liability will be
facilitated by arresting deterioration of the property and
restoring it to salable condition. In this case, the district
director may, in his discretion, subordinate the tax lien on the
building to the mechanic's lien. Example
(3).
E, a manufacturer of electronic equipment, obtains financing from
F, a lending institution, pursuant to a security agreement, with
respect to which a financing statement was duly filed under the
Uniform Commercial Code on Example
(4).
Suit is brought against G by H, who claims ownership of property
the legal title to which is held by G. A Federal tax lien against
G, notice of which has previously been filed, will be enforceable
against the property if G's title is confirmed. Because section
6323(b)(8) is inapplicable, J, an attorney, is unwilling to defend
the case for G unless he is granted a contractual lien on the
property, superior to the Federal tax lien. Upon examination, the
district director believes that the successful defense of the case
by G will increase the amount ultimately realizable from G's
property and will facilitate collection of the tax liability. In
this case, the district director may, in his discretion,
subordinate the tax lien to J's contractual lien on the disputed
property to secure J's reasonable fees and expenses. (3) Subordination of section 6324B lien. --The
district director may issue a certificate of subordination with
respect to a lien imposed by section 6324B if the district
director determines that the interests of the United States will
be adequately secured after such subordination. For example, A,
a qualified heir of qualified real property, needs to borrow money
for farming purposes. If the current fair market value of the real
property is $150,000, the amount of the claim to which the special
lien is to be subordinated is $40,000, the potential liability for
additional tax (as defined in section 2032A(c)) is less than
$55,000, and there are no other facts to indicate that the
interest of the United States will not be adequately secured, the
district director may issue a certificate of subordination. The
result would be the same if the loan were for bona fide purposes
other than farming. (4) Application for certificate of subordination. --Any
person desiring a certificate of subordination under this
paragraph shall submit an application therefor in writing to the
district director responsible for the collection of the tax. The
application shall contain such information as the district
director may require. (e) Nonattachment of lien. --If a district director determines that, because of
confusion of names or otherwise, any person (other than the person
against whom the tax was assessed) is or may be injured by the
appearance that a notice of lien filed in accordance with
§301.6323(f)-1 refers to such person, the district director may
issue a certificate of nonattachment. Such certificate shall state
that the lien, notice of which has been filed, does not attach to
the property of such person. Any person desiring a certificate of
nonattachment under this paragraph shall submit an application
therefor in writing to the district director responsible for the
collection of the tax. The application shall contain such
information as the district director may require. (f) Effect of certificate (1) Conclusiveness. --Except as provided in subparagraphs (2) and (3) of this
paragraph, if a certificate is issued under section 6325 by a
district director and the certificate is filed in the same office
as the notice of lien to which it relates (if the notice of lien
has been filed), the certificate shall have the following effect
-- (i)
In the
case of a certificate of release issued under paragraph (a) of
this section, the certificate shall be conclusive that the tax
lien referred to in the certificate is extinguished; (ii)
In the
case of a certificate of discharge issued under paragraph (b) or
(c) of this section, the certificate shall be conclusive that the
property covered by the certificate is discharged from the tax
lien; (iii)
In the
case of a certificate of subordination issued under paragraph (d)
of this section, the certificate shall be conclusive that the lien
or interest to which the Federal tax lien is subordinated is
superior to the tax lien; and (iv)
In the
case of a certificate of nonattachment issued under paragraph (e),
the certificate shall be conclusive that the lien of the United
States does not attach to the property of the person referred to
in the certificate. (2) Revocation of certificate of release or nonattachment (i)
In general. --If
a district director determines that either -- (a) A
certificate of release or a certificate of nonattachment of the
general tax lien imposed by section 6321 was issued erroneously or
improvidently, or (b) A
certificate of release of such lien was issued in connection with
a compromise agreement under section 7122 which has been breached, and
if the period of limitation on collection after assessment of the
tax liability has not expired, the district director may revoke
the certificate and reinstate the tax lien. The provisions of this
subparagraph do not apply in the case of the lien imposed by
section 6324 relating to estate and gift taxes. (ii)
Method of revocation and reinstatement. --The
revocation and reinstatement described in subdivision (i) of this
subparagraph is accomplished by -- (a) Mailing
notice of the revocation to the taxpayer at his last known address
(see §301.6212-2 for further guidance regarding the definition of
last known address); and (b) Filing
notice of the revocation of the certificate in the same office in
which the notice of lien to which it relates was filed (if the
notice of lien has been filed). (iii)
Effect of reinstatement (a) Effective date. --A tax lien reinstated in accordance with the provisions of
this subparagraph is effective on and after the date the notice of
revocation is mailed to the taxpayer in accordance with the
provisions of subdivision (ii)(a) of this subparagraph, but
the reinstated lien is not effective before the filing of notice
of revocation, in accordance with the provisions of subdivision (ii)(b)
of this subparagraph, if the filing is required by reason of the
fact that a notice of the lien had been filed. (b) Treatment
of reinstated lien. --As of the effective date of reinstatement, a reinstated lien has the same
force and effect as a general tax lien imposed by section 6321
which arises upon assessment of a tax liability. The reinstated
lien continues in existence until the expiration of the period of
limitation on collection after assessment of the tax liability to
which it relates. The reinstatement of the lien does not
retroactively reinstate a previously filed notice of lien. The
reinstated lien is not valid against any holder of a lien or
interest described in §301.6323(a)-1 until notice of the
reinstated lien has been filed in accordance with the provisions
of §301.6323(f)-1 subsequent to or concurrent with the time the
reinstated lien became effective. (iv)
Example. --The
provisions of this subparagraph may be illustrated by the
following example: Example.
On (3) Certificates void under certain conditions. --Notwithstanding
any other provisions of subtitle F of the Code, any lien for
Federal taxes attaches to any property with respect to which a
certificate of discharge has been issued if the person liable for
the tax reacquires the property after the certificate has been
issued. Thus, if property subject to a Federal tax lien is
discharged therefrom and is later reacquired by the delinquent
taxpayer at a time when the lien is still in existence, the tax
lien attaches to the reacquired property and is enforceable
against it as in the case of after-acquired property generally. (g) Filing of certificates and notices. --If
a certificate or notice described in this section may not be filed
in the office designated by State law in which the notice of lien
imposed by section 6321 (to which the certificate or notice
relates) is filed, the certificate or notice is effective if filed
in the office of the clerk of the United States district court for
the judicial district in which the State office where the notice
of lien is filed is situated. [Reg. §301.6325-1.]
TEMP- Release of liens (a) In general. --The district director shall issue a certificate of release
for a filed notice of Federal tax lien not later than 30 days
after the date on which the district director finds that the
entire tax liability listed in such notice of Federal tax lien has
been fully satisfied (as defined in paragraph (c) of this section)
or has become legally unenforceable. (b) Certificate of release for a lien which has become legally
unenforceable. --The
district director shall have the authority to file a notice of
Federal tax lien which also contains a certificate of release
pertaining to those liens which become legally unenforceable. Such
release will become effective as a release as of a date prescribed
in the document containing the notice of Federal tax lien and
certificate of release. (c) Satisfaction of tax liability. --For
purposes of paragraph (a) of this section, satisfaction of the tax
liability occurs when -- (1) The
district director determines that the entire tax liability listed
in a notice of Federal tax lien has been fully satisfied. Such
determination will be made as soon as practicable after tender of
payment; or (2) The
taxpayer provides the district director with proof of full payment
(as defined in paragraph (d) of this section) with respect to the
entire tax liability listed in a notice of Federal tax lien
together with the information and documents set forth in paragraph
(f) of this section. See
paragraph (e) of this section if more than one tax liability is
listed in a notice of Federal tax lien. (d) Proof of full payment. --As used in paragraph (c)(2) of this section, the term
"proof of full payment" means -- (1) An
internal revenue cashier's receipt reflecting full payment of the
tax liability in question; (2) A
canceled check in an amount sufficient to satisfy the tax
liability for which the release is being sought; or (3) Any other
manner of proof acceptable to the district director. (e) Notice of a Federal tax lien which lists multiple liabilities.
--When
a notice of Federal tax lien lists multiple tax liabilities, the
district director shall issue a certificate of release when all of
the tax liabilities listed in the notice of Federal tax lien have
been fully satisfied or have become legally unenforceable. In
addition, if the taxpayer requests that a certificate of release
be issued with respect to one or more tax liabilities listed in
the notice of Federal tax lien and such liability has been fully
satisfied or has become legally unenforceable, the district
director shall issue a certificate of release. For example, if a
notice of Federal tax lien lists two separate liabilities and one
of the liabilities is satisfied, the taxpayer may request the
issuance of a certificate of release with respect to the satisfied
tax liability and the district director shall issue a release. See
paragraph (c) of this section in determining when a tax lien has
been fully satisfied. A request made by the taxpayer shall be made
to the district director in accordance with the procedures in
paragraph (f) of this section. (f) Taxpayer requests. --A request for a certificate of release with respect to a
notice of Federal tax lien shall be submitted in writing to the
district director (marked for the attention of the Chief, Special
Procedures Function) of the district in which the notice of
Federal tax lien was filed. The request shall contain the
following -- (1) Name and
address of the taxpayer; (2) A copy of
the notice of Federal tax lien affecting the property; and (3) The
grounds upon which the issuance of a release is sought. (g) Effective date. --The provisions of this section are effective with respect to
a notice of Federal tax lien (1) which is filed after
T.D. 7886, 1983-1 CB 342 A
new Part 401, Temporary Procedure and Administration Regulations
under the Tax Equity and Fiscal Responsibility Act of 1982, is
added by this document to Title 26 of the Code of Federal
Regulations. In addition, this document contains temporary
regulations under new Part 401 relating to certain requirements
for the issuance of a release of a notice of Federal tax lien
under section 6325(a) of the Internal Revenue Code of 1954, as
amended by section 348 of the Tax Equity and Fiscal Responsibility
Act of 1982 (Pub. L. 97-248, 96 Stat. 638 [1982-2 C.B. 462, 580]).
The temporary regulations provided by this document will remain in
effect until superseded by the final regulations on this subject. The
temporary regulations contain provisions relating to the issuance
of a certificate of release of a notice of Federal Tax lien under
section 6325(a) of the Code. Section Section
Section
6325(a) requires that the Secretary issue a certificate of release
of a notice of Federal tax lien no later than 30 days after the
day on which the Secretary finds that the liability for the tax
has been fully satisfied or hasbecome legally unenforceable. Under
paragraph (c) of §401.6325-1, satisfaction of the tax liability
occurs either when (1) the district director determines, as soon
as practicable after tender of payment, that the entire tax
liability has beensatisfied in full, or (2) when the taxpayer
provides the district director with proof of full payment of the
tax liability. Section Paragraph
(e) of §401.6325-1 provides that when a notice of Federal tax
lien lists multiple tax liabilities, the district director shall
issue a certificate of release when all of the tax liabilities
have been fully satisfied or havebecome legally unenforceable. In
addition, if the taxpayer requests that a certificate of release
be issued for one of the liabilities listed in the notice of
Federal tax lien and such liability has been fully satisfied or
has become legally unenforceable, the district director shall
issue a certificate of release. Thus, for example, if a notice of
Federal tax lien is filed in 1983 covering an employment tax
liability assessed for the third quarter of 1982 and an employment
tax liability assessed for the fourth quarter of 1982, a release
will not automatically be issued until the entire employment tax
liabilities for the third and fourth quarters of 1982 have been
satisfied or have become legally unenforceable. However, if the
taxpayer paid the employment tax liability for the third quarter
of 1982, the taxpayer can request that a certificate of release be
issued for the third quarter tax liability and the district
director shall issue a release. This provision will substantially
reduce the burden, both administratively and economically, on the
taxpayer and district director. Section
NON-APPLICABILITY OF EXECUTIVE ORDER 12291 The
Treasury Department has determined that this temporary regulation
is not subject to review under Executive Order 12291 or the
Treasury and OMB implementation of the Order dated REGULATORY FLEXIBILITY ACT No
general notice of proposed rulemaking is required by 5 U.S.C.
553(b) for temporary regulations. Accordingly, the Regulatory
Flexibility Act does not apply and no Regulatory Flexibility
Analysis is required for this rule. DRAFTING INFORMATION The
principal author of these temporary regulations is Neil W. Zyskind
of the Legislation and Regulations Division of the Office of Chief
Counsel, Internal Revenue Service. However, personnel from othr
offices of the Internal RevenueService and Treasury Department
participated in developing the regulation, both on matters of
substance and style. * * * * * Accordingly,
a new Part 401, Temporary Procedure and Administration Regulations
under the Tax Equity and Fiscal Responsibility Act of 1982, is
added to Title 26 of the Code of Federal Regulations. Part 401
reads as follows: PART 401--TEMPORARY PROCEDURE (a)
In general. The district director shall issue a certificate
of release for a filed notice of Federal tax lien not later than
30 days after the date on which the district director finds that
the entire tax liability listed in such notice of Federal tax lien
has been fully satisfied (as defined in paragraph (c) of this
section) or has become legally unenforceable. (b)
Certificate of release for a lien which has become legally
unenforceable. The district director shall have the authority
to file a notice of Federal tax lien which also contains a
certificate of release pertaining to those liens which become
legally unenforceable. Such release will become effective as a
release as of a date prescribed in the document containing the
notice of Federal tax lien and certificate of release. (c)
Satisfaction of tax liability. For purposes of paragraph
(a) of this section, satisfaction of the tax liability occurs
when-- (1) The district director determines that th |