In prior articles, a tax attorney from The McGuire Law Firm has discussed Federal Tax Liens. Such articles have been more general in nature and the law firm has received requests to provide articles on more specific issues in relation to a tax lien. Please remember, these articles are always for informational purposes only. The McGuire Law Firm does not provide legal services from its website, and no attorney-client relationship is created from an individual reviewing the firm’s website. The article below has been prepared by a tax attorney to provide additional information regarding the purpose and effect of filing the Notice of Federal Tax Lien.
The Internal Revenue Service does not need to file the Notice of Federal Tax Lien to perfect the lien against a taxpayer that has a debt to the IRS. The filing of the tax lien protects the federal government’s right of priority against other third parties. Typically, these third parties may include a purchaser of an asset, the holder of a security interest, a mechanic’s lienor, or a judgment creditor. See IRC Section 6323(a). In regards to the clerk actually recording the tax lien, the court held in In re Tracey, 394 B.R. 635 (1st Circuit 2008), that the act of filing the notice of federal tax lien sufficient in terms of IRC Section 6323(a) purposes regarding personal property even when the clerk of the court failed to record the tax lien filed by the IRS. Typically, until the IRS files the tax lien, a purchaser of property or an asset will take the asset or property free and clear from the tax lien. Furthermore, if the IRS does not file the tax lien, the holder of a security interest, mechanics lien, and judgment lien will take priority over the IRS’ tax lien.
Under IRC Section 6323(f)(4), some states would require the notice of federal tax lien to be filed with respect to real property be indexed in order to be treated as being filed. Indexing is required in a state whereby a deed must be indexed to be valid against a later bona fide purchaser (see Hanafy v. U.S., 991 F. Supp. 794). If you have questions regarding the application of IRC Section 6323(f)(4) you should contact a tax attorney or tax professional in your local area.
If the IRS has filed a Notice of Federal Tax Lien against you and your assets, you have a tax debt and an overall tax matter with the Internal Revenue Service that requires immediate assistance and attention. Such tax lien will inhibit your ability to dispose of assets and receive money or other forms of compensation. Please feel free to contact a Denver tax attorney at The McGuire Law Firm if you have a tax issue of which you feel a tax attorney could assist you or your business with. The McGuire Law Firm offers a free consultation to all potential clients.