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Certificate of Discharge |
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6325(b)(2) PART PAYMENT; INTEREST OF UNITED STATES VALUELESS. --Subject
to such regulations as the Secretary may prescribe, the Secretary
may issue a certificate of discharge of any part of the property
subject to the lien if -- 6325(b)(2)(A)
there
is paid over to the Secretary in partial satisfaction of the
liability secured by the lien an amount determined by the
Secretary, which shall not be less than the value, as determined
by the Secretary, of the interest of the United States in the part
to be so discharged, or 6325(b)(2)(B)
the
Secretary determines at any time that the interest of the In
determining the value of the interest of the 6325(b)(3) SUBSTITUTION OF PROCEEDS OF 6325(b)(4) RIGHT OF SUBSTITUTION OF VALUE. -- 6325(b)(4)(A)
IN GENERAL. --At
the request of the owner of any property subject to any lien
imposed by this chapter, the Secretary shall issue a certificate
of discharge of such property if such owner -- 6325(b)(4)(A)(i) deposits with the Secretary an amount of money equal to the value of the
interest of the United States (as determined by the Secretary) in
the property; or 6325(b)(4)(A)(ii) furnishes a bond acceptable to the Secretary in a like amount. 6325(b)(4)(B)
REFUND OF DEPOSIT WITH INTEREST 6325(b)(4)(B)(i) the unsatisfied liability giving rise to the lien can be satisfied from a
source other than such property; or 6325(b)(4)(B)(ii) the value of the interest of the United States in the property is less
than the Secretary's prior determination of such value. 6325(b)(4)(C)
USE OF DEPOSIT, 6325(b)(4)(C)(i) apply the amount deposited, or collect on such bond, to the extent
necessary to satisfy the unsatisfied liability secured by the
lien; and 6325(b)(4)(C)(ii) refund (with interest as described in subparagraph (B)) any portion of
the amount deposited which is not used to satisfy such liability. 6325(b)(4)(D)
EXCEPTION. --Subparagraph
(A) shall not apply if the owner of the property is the person
whose unsatisfied liability gave rise to the lien. 6325(c) ESTATE OR 6325(d) SUBORDINATION OF LIEN. --Subject to such regulations as the Secretary may prescribe,
the Secretary may issue a certificate of subordination of any lien
imposed by this chapter upon any part of the property subject to
such lien if -- 6325(d)(1) there
is paid over to the Secretary an amount equal to the amount of the
lien or interest to which the certificate subordinates the lien of
the United States, 6325(d)(2) the
Secretary believes that the amount realizable by the United States
from the property to which the certificate relates, or from any
other property subject to the lien, will ultimately be increased
by reason of the issuance of such certificate and that the
ultimate collection of the tax liability will be facilitated by
such subordination, or 6325(d)(3) in
the case of any lien imposed by section 6324B, if the Secretary
determines that the United States will be adequately secured after
such subordination. 6325(e) NONATTACHMENT OF LIEN. --If the Secretary 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 under section 6323 refers to such person,
the Secretary may issue a certificate that the lien does not
attach to the property of such person. 6325(f) EFFECT OF CERTIFICATE. -- 6325(f)(1) CONCLUSIVENESS. --Except as provided in paragraphs (2) and (3), if a
certificate is issued pursuant to this section by the Secretary
and is filed in the same office as the notice of lien to which it
relates (if such notice of lien has been filed) such certificate
shall have the following effect: 6325(f)(1)(A)
in the
case of a certificate of release, such certificate shall be
conclusive that the lien referred to in such certificate is
extinguished; 6325(f)(1)(B)
in the
case of a certificate of discharge, such certificate shall be
conclusive that the property covered by such certificate is
discharged from the lien; 6325(f)(1)(C)
in the
case of a certificate of subordination, such certificate shall be
conclusive that the lien or interest to which the lien of the 6325(f)(1)(D)
in the
case of a certificate of nonattachment, such certificate shall be
conclusive that the lien of the 6325(f)(2) REVOCATION OF CERTIFICATE OF RELEASE OR NONATTACHMENT. --If
the Secretary determines that a certificate of release or
nonattachment of a lien imposed by section 6321 was issued
erroneously or improvidently, or if a certificate of release of
such lien was issued pursuant to a collateral agreement entered
into in connection with a compromise under section 7122 which has
been breached, and if the period of limitation on collection after
assessment has not expired, the Secretary may revoke such
certificate and reinstate the lien -- 6325(f)(2)(A)
by
mailing notice of such revocation to the person against whom the
tax was assessed at his last known address, and 6325(f)(2)(B)
by
filing notice of such revocation in the same office in which the
notice of lien to which it relates was filed (if such notice of
lien had been filed). Such
reinstated lien (i) shall be effective on the date notice of
revocation is mailed to the taxpayer in accordance with the
provisions of subparagraph (A), but not earlier than the date on
which any required filing of notice of revocation is filed in
accordance with the provisions of subparagraph (B), and (ii) shall
have the same force and effect (as of such date), until the
expiration of the period of limitation on collection after
assessment, as a lien imposed by section 6321 (relating to lien
for taxes). 6325(f)(3) CERTIFICATES VOID UNDER CERTAIN CONDITIONS. --Notwithstanding
any other provision of this subtitle, any lien imposed by this
chapter shall attach to any property with respect to which a
certificate of discharge has been issued if the person liable for
the tax reacquires such property after such certificate has been
issued. 6325(g) FILING OF CERTIFICATES 6325(h) CROSS REFERENCE. -- For
provisions relating to bonds, see chapter 73 (sec. 7101 and
following).
§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 United States valueless (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 United States in the property with respect to which the
certificate of discharge is to be issued. (ii) Interest of the United States valueless. --The
district director may, in his discretion, issue a certificate of
discharge of any part of the property subject to the lien if he
determines that the interest of the United States in the property
to be so discharged has no value. (iii) Valuation of interest of United States. --For
purposes of this subparagraph, in determining the value of the
interest of the United States in the property, or any part
thereof, with respect to which the certificate of discharge is to
be issued, the district director shall give consideration to the
value of the property and the amount of all liens and encumbrances
thereon having priority over the Federal tax lien. In determining
the value of the property, the district director may, in his
discretion, give consideration to the forced sale value of the
property in appropriate cases. (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 United States. (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 c
ontain 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.] [T.D.
6119, 12-31-54. Amended by T.D. 6425, 11-10-59; T.D.
6498, 10-24-60; T.D. 6700, 1-6-64; T.D. 7429,
8-20-76; T.D. 7847, 11-9-82 and T.D. 8939,
1-11-2001.] |