Can the Internal Revenue Service refile a Notice of Federal Tax Lien? This is a very important question if in fact the IRS has filed a tax lien on you or your business. The answer, of which, greater detail is provided below, is yes, the IRS can refile a tax lien. The article below has been prepared by John McGuire, a tax attorney in Denver, Colorado at The McGuire Law Firm. Please remember to always discuss your tax issues and related questions with your tax attorney or tax advisor.
Some background and overview will assist in answering the question above and general procedures followed by the Internal Revenue Service. A statutory lien arises when a taxpayer does not pay a tax debt after demand has been made. If no notice of federal tax lien is filed, the duration of a statutory lien will depend only upon the collection statute. When the Notice of Federal Tax Lien is file, the statutory lien is impacted by such lien notice. A statutory lien is always extinguished when the collection statute expires, but a statutory lien can also be released through self-releasing lien language on the Notice of Federal Tax Lien. The self-releasing lien language may apply even if the collection statute was extended, or perhaps suspended.
The main policy behind a self-releasing lien is to ensure the government’s compliance with certain laws. Under Internal Revenue Code Section 6325, the IRS must issue a lien released within thirty days of the liability becoming legally unenforceable or the liability being paid. The trigger for a self-releasing lien will coincide with the initial collection statute expiration date, which helps to ensure that the IRS property releases the tax lien within the period of time mandated by law.
When it is determined there is a need to continue the statutory lien and the Notice of Federal Tax Lien, Form 668Y is used to notify creditors (and the public) that the statutory lien and Notice of Federal Tax Lien remain in full force. It is very important to note that the refiling of a tax lien can only occur while the tax liability can be collected upon, meaning the collection statute has not expired or the collection statute has been extended or suspended. The IRS does not have to refile the lien though, even if the collection statute is open. Generally, the IRS will only refile the liens when there is a need to preserve the attachment of the statutory lien to certain assets and maintain priority lien position amongst other creditors. When the lien notice is refiled Internal Revenue Code Section 6323(g) the IRS’ lien position is preserved.
All this being said, what is the refiling period? The time the IRS has to refile a notice of Federal Tax Lien has a beginning and end date. The refiling period is a 12 month period. This one year period the IRS has to refile the tax lien is the one year period ending 30 days after the ten-year period following the assessment of the tax for which the lien was filed. For example, if the tax was assessed on April 15, 2010, the refiling period would be April 16, 2019 through April 15, 2020. In short, the IRS has until 30 days after the collection statute expiration date to refile the lien.
The above article was prepared by John McGuire of The McGuire Law Firm. As a tax attorney and business attorney, Johns practice focuses primarily on tax issues before the IRS, tax related opinions & advice and business transactions.