26 U.S.C. Subtitle F, Chapter 64, Subchapter C, Part II: Liens
26 U.S.C. §7402(e): Jurisdiction of District Courts, Actions
to quiet title
Uniform Federal Lien Registration
Act- National Conference of Commissioners on Uniform State
IRS Form 1468:
Guidelines for Notices of Federal Tax Lien and Centralized Lien Processing
IRS Form 12277: Application
for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien
26 U.S.C. §6331: Levy and distraint
TITLE 26 >
Subtitle F >
CHAPTER 64 >
Subchapter D >
PART II > Sec. 6331.
26 U.S.C. Sec. 6331. Levy and distraint
(a) Authority of Secretary
If any person liable to pay any tax
neglects or refuses to pay the same within 10 days after notice
and demand, it shall be lawful for the Secretary to collect such
tax (and such further sum as shall be sufficient to cover the expenses
of the levy) by levy upon all property and rights to property (except
such property as is exempt under section
6334) belonging to such person or on which there is a lien provided
in this chapter for the payment of such tax.
Levy may be made upon the
accrued salary or wages of any officer, employee, or elected official,
of the United States, the District of Columbia, or any agency or
instrumentality of the United States or the District of Columbia,
by serving a notice of levy on the employer (as defined in section
3401(d)) of such officer, employee, or elected official.
If the Secretary makes a finding that the collection of such tax
is in jeopardy, notice and demand for immediate payment of such
tax may be made by the Secretary and, upon failure or refusal to
pay such tax, collection thereof by levy shall be lawful without
regard to the 10-day period provided in this section.
(b) Seizure and sale of property
The term ''levy'' as used in this
title includes the power of distraint and seizure by any means.
Except as otherwise provided in subsection (e), a levy shall extend
only to property possessed and obligations existing at the time
thereof. In any case in which the Secretary may levy upon property
or rights to property, he may seize and sell such property or rights
to property (whether real or personal, tangible or intangible).
1083, 48 F.R. 10060: 26 CFR §301.6331-1 (OFFSITE LINK)-the
only regulation relating to levy. Proves that levies cannot affect
right because the regulation is interpretive rather than legislative
Title 26, Appendix, Title XXXII: Lien and Levy Actions
Federal Tax Lien Act, Pub.
L. 89-719, 80 Stat. 1144
Senate Report 89-1708:
Federal Tax Lien Act
Uniform Commercial Code (UCC)
Secured Transactions in a Nutshell-excellent book by Henry J.
Bailey, III. West Publishing
Internal Revenue Manual, Section 18.104.22.168.2
Place of Filing
1. The filing of the notice
of federal tax lien is governed by both federal and state law. It
is important to determine the place of the filing of the NFTL in
order to preserve the Service’s lien status with respect to certain
types of property and with respect to certain types of taxpayers.
2. Generally speaking, different
filing rules apply for real property and personal property. IRC
6323(f) provides that states may designate the place for filing
the NFTL. As against real property, the NFTL is filed in the one
office designated by the State where the property is physically
located. As against personal property, the situs of both tangible
or intangible property is the residence of the taxpayer at the time
the notice of lien is filed. A notice of federal tax lien is therefore
to be filed in the one office designated by the
State where the taxpayer
resides at the time the notice of lien is filed. Most
states require the NFTL be filed where other encumbrances on property
are filed, e.g., in the real and/or personal property records in
the office of the county recorder or the clerk of the county where
the real property is located or where the taxpayer resides.
Revenue Manual, Section 5.12: Federal Tax Liens
Treatise on the Law of Liens-book by Leonard Jones, 1894.
Treatise on Mechanic's Liens-book by William M. Rockwell,
1909. Google books
Treatise on Secret Liens and Reputed Ownership-book by
Abram I. Elkus, 1910. Google books
Concise Treatise on Mortgages, Pledges, and Liens-book by Walter
Ashburner, 1897. Google books.
Contract and Statutory Liens in California and Their Enforcement-book
by Charles M. Bufford, 1903. Google Books.
Livingston's Lessee v. Moore
32 U.S. 469, *481-482, 1833 WL 4194,**9 (U.S.Pa. (U.S.JanuaryTerm 1833)
It may be said, that the language of the act of 1785, giving a lien
like a judgment in the supreme *482 court, means nothing more
than an incumbrance co-extensive with every county in the state.
But this interpretation was rejected in the circuit court, for the
obvious reason, that a prior paragraph of the same section of the
act provides in terms for that purpose, which, therefore, would
not be repeated. Both the fiscal and judicial lines are but executory,
jus ad rem, not in re, requiring other process to execute them.
There is a right to lien, but not to execution. The obnoxious
acts give execution; not such as follows judgment in due course
of law, but extraordinary, arbitrary, executive, extra-judicial,
and therefore, unconstitutional, execution of the lien.
Lessee v. Moore 32 U.S. 469, *481-482, 1833 WL 4194,**9 (U.S.Pa.
(U.S.JanuaryTerm 1833) ]
You can file lawsuits to remove all IRS liens from both real estate
and personal property by invoking
28 U.S.C. Section 2409 or
2410. Removing liens from your personal property will prevent
the IRS from issuing and/or enforcing notices of levy.
Example Lawsuit to Quiet Title-John Jennings
IRS Liens and Levies-article
IRS Notice of Lien Pertains to Estate Tax-Eddie Kahn
Village of Dimondale v. Grable, Michigan Court of Appeals, Case No.
213277-quiet title action
Removing Federal Tax Liens-Dr. Eduardo Rivera
Relation Back Doctrine Condemns Administrative Tax Lien and Levy-Dan
Black's Law Dictionary, Sixth
Edition, p. 922:
claim, encumbrance, or charge on property for payment of some debt,
obligation or duty. Sullins v. Sullins, 6 Wash.2d 283, 396 P.2d
886, 888. Qualified right of property which a creditor has in
or over specific property of his debtor, as security for the debt or
charge or for performance of some act. Right or claim against
some interest in property created by law as an incident of contract.
Right to enforce charge upon property of another for payment or satisfaction
of debt or claim. Vaughan v. John Hancock Mut. Life Ins. Co.,
Tex.Civ.App., 61 S.W.2d 189, 190. Right to retain property for
payment of debt or demand. Bell v. Dennis, 43 N.M. 350, 93 P.2d
1003, 1006. Security for a debt, duty or other obligation.
Hurley v. Boston R. Holding Co., 315 Mass. 591, 54 N.E.2d 183, 193.
Tie that binds property to a debt or claim for its satisfaction.
United States v. 1364.76875 Wine Gallons, More or Less, of Spirituous
Liquors, D.C.Mo., 60 F.Supp. 389, 392. Liens are “property rights”.
In re Pennsylvania Central Brewing Co., C.C.A.Pa., 114 F.2d 1010, 1013.
The word “lien” is a generic term and, standing alone, includes liens
acquired by contract or by operation of law. Egyptian Supply Co.
v. Boyd, C.C.A.Ky., 117 F.2d 608, 612.
A charge against or interest in property to secure payment of a debt
or performance of an obligation. Bankruptcy Code §101.
Lien by operation of law. Where the law itself, without the stipulation
of the parties, raises a lien, as an implication or legal consequence
from the relation of the parties or the circumstances of their dealings.
Liens of this species may arise either under the rules of common law
or of equity or under a statute. In the first case they are called
“common –law liens;” in the second, “equitable liens;” in the third,
[Black's Law Dictionary, Sixth Edition, p. 922]
Collection Practices Act (FDCPA)
U.S. Attorney Manual, Title 4, Civil Resource Manual: 95 Priority of
Until the Supreme Court decided United
States v. Kimbell Foods, Inc., 440 U.S. 715 (1979), there was a
conflict of authority as to:
A. Whether a lien of the United
States should be subordinated to a later rival lien solely because
state law affords priority to the rival lien; and
B. Whether a rival lien, prior
in time to a lien of the United States and entitled to priority
under state law, should be denied priority if inchoate.
Kimbell Foods applied state priority
law to consensual liens securing claims of the Farmers Home Administration
and the Small Business Administration. In determining whether state
law applies to liens arising from other federal programs, particular
attention should be paid to the Court's three inquiries in Section
III of the Kimbell Foods opinion:
A. Whether the federal program
at issue necessarily requires uniform federal rules.
B. Whether adopting state substantive
law would frustrate specific objectives of the federal programs
C. The extent of disruption in
normal commercial relationships caused by a uniform federal
rule. If not persuaded that a special federal rule is required,
the court may adopt the relevant state rule as the relevant
In the case of loans made by HUD,
the court in Chicago Title Insurance Co. v. Sherred Village Assoc.,
708 F.2d 804 (1st Cir. 1983), held that mechanic's liens recorded
under state law have priority over a prior recorded federal mortgage.
Thus, HUD mortgages would appear to be in the same situation vis-a-vis
priority of liens as SBA and FmHA.
Courts have also
applied the Kimbell Foods criteria in several cases involving local
tax liens that have priority under state law and existing federal
mortgages. In United States v. Dansby, 509 F. Supp. 188 (N.D. Ohio
1981) the court held that, although the tax lien was senior under
Florida law, it could not operate "so as to destroy the pre-existing
federal lien." See also United States v. David Friedland, et al.,
502 F. Supp. 611 (D.N.J. 1980), aff'd, 672 F.2d 905 (3d Cir. 1981).
Where the consensual
lien arises pursuant to a federal statute that prescribes a particular
priority, that priority will be honored.
The Kimbell Foods
court also suggested limits on its decision:
Adopting state law as an appropriate
federal rule does not preclude federal courts from excepting
local law that prejudice federal interests (citing cases). The
issue here, however, involves commercial rules of general applicability,
based on codes that are remarkably uniform throughout the Nation.
(440 U.S. at 736, n.37)
does not undertake to cover the subject of tax liens. Guidance as
to them should be sought from the Tax Division. Questions pertaining
to non-tax, non-consensual liens (e.g., those based upon judgments,
criminal fines, and statutory civil penalties) remain unresolved.
For a further discussion, see Commercial Litigation Branch Monograph,
Choice of Laws Decision in Federal Courts After Kimbell Foods.
The federal departments
and agencies which make loans secured by liens on real and personal
property will often pay state and local ad valorem taxes on the
mortgaged property, if the borrower fails to pay them. Such payments
by the government are sometimes required by statute and at other
times are made as a matter of policy.
In light of Kimbell
Foods, it is not clear whether or not taxes which are not ad valorem
have this priority. Prior to Kimbell Foods, cases such as In re
Lehigh Valley Mills, Inc., 341 F.2d 398 (3d Cir. 1965); United States
v. Clover Spinning Mills Co., 373 F.2d 274 (4th Cir. 1966); Director
of Revenue, State of Colo. v. United States, 392 F.2d 307 (10th
Cir. 1968), held that taxes which are not ad valorem do not have
On occasion, owners
or lienors of property on which the United States holds a lien may
ask for release of the lien or of the government's right of post-sale
redemption. No release should be executed without the receipt of
some consideration. The agency's view should be requested in each
case. The dollar amount of the authority delegated to the USA to
compromise lien claims in actions under 28 U.S.C. § 2410 is equally
applicable to the compromise of post-sale redemption rights of the
United States under 28 U.S.C. § 2410(c). Cases involving tax liens,
liens on a vessel or other maritime property, and liens arising
from a criminal fine judgment or a judgment on an appearance bond,
are expressly excluded from the Civil Division delegation of authority
to USAs. If a release of a lien or right of redemption should be
expressly limited to the precise property, lien or right of redemption
which is the subject of the plaintiff's suit.
The priority of federal tax liens as against competing liens asserted
against a taxpayer's property is governed by federal law.
Aquilino v. United States, 363 U.S. 509, 514, 80 S.Ct. 1277,
4 L.Ed.2d 1365 (1960).
The Internal Revenue Code provides that the amount of assessed tax,
interest, and penalty not paid by a person after demand becomes
a lien in favor of the United States “upon all property and rights
to property” belonging to the person.
26 U.S.C. § 6321. The lien “arise[s] at the time the assessment
is made.” Id. § 6322. But it is not “valid as against any
purchaser, holder of a security interest, mechanic's lienor, or
judgment lien creditor ” until it is recorded locally.
§ 6323 (emphasis added). The priority between a recorded tax
lien and a judgment lien is governed by the rule of “first in time,
first in right.”
United States v. Pioneer Am. Ins. Co., 374 U.S. 84, 87, 83
S.Ct. 1651, 10 L.Ed.2d 770 (1963); see also
United States v. Equitable Life Assurance Soc'y of the United
States, 384 U.S. 323, 327-28, 86 S.Ct. 1561, 16 L.Ed.2d 593
Air Power, Inc. v. United States, 741 F.2d 53, 55 (4th Cir.1984).
But before a judgment lienholder can have priority over tax lien,
she must be a “judgment lien creditor” as that term is used in
26 U.S.C. § 6323.
As used in
§ 6323, “judgment lien creditor” is defined by
Treasury Regulation 301.6323(h)-1(g) as “a person who has obtained
a valid judgment, in a court of record and of competent jurisdiction,
for the recovery of specifically designated property or for a certain
sum of money,” and who “has perfected a lien under the judgment
on the property involved.”
26 C.F.R. § 301.6323(h)-1(g) (emphasis added).
In this case, Collier contends that she perfected her lien on Charco's
property on October 21, 1996, when she domesticated her Virginia
judgment by filing it in Mercer County, West Virginia. She argues
therefore that her lien was valid against the IRS' subsequently
filed tax lien. Even though Collier did not record her judgment
until January 1997-after the IRS had recorded its tax lien-she argues
that recordation was not required under West Virginia law to perfect
her lien. She relies on
West Virginia Code § 38-3-6, which provides in part that “every
judgment for money rendered in this State ... shall be a lien on
all the real estate of [the defendant].”
It is federal law, however, not state law, that defines when a judgment
lien is “perfected”:
A judgment lien is not perfected until the identity of the lienor,
the property subject to the lien, and the amount of the lien
are established.... If recording
or docketing is necessary under local law before a judgment
becomes effective against third parties acquiring liens on real
property, a judgment lien under such local law is not perfected
with respect to real property until the time of such recordation
or docketing. ...
26 C.F.R. § 301.6323(h)-1(g) (emphasis added). Thus, before
a judgment lien is perfected, a judgment lienor must (1) identify
the lienor, (2) identify the property subject to the lien, (3) identify
the amount of the lien, and (4) record the lien “[i]f recording
or docketing is necessary under local law before a judgment becomes
effective against third parties acquiring liens on real property.”
Id. The determinative question in this case is whether Collier
had to record her judgment lien in order to perfect it, which depends
on whether recording is required by local law “before a judgment
becomes effective against third parties acquiring liens on real
property.” Id. (emphasis added).
Rich v. Braxton, 158 U.S. 375 (1895): (forbids judges from invoking
equity jurisdiction to remove Common Law Liens or similar "clouds of
Mr. Pomeroy, in his treatise on Equity
Jurisprudence, while recognizing it to be the general rule, established
by the weight of authority, that equity will not interfere to remove
a cloud from title 'where the instrument or proceeding constituting
the alleged cloud is absolutely void on its face, so that no extrinsic
evidence is necessary to show its invalidiy ,' or 'where the instrument
or proceeding is not thus void on its face, but the party claiming,
in order to enforce it, must necessarily offer evidence which will
inevitably show its invalidity and destroy its efficacy,'-which
doctrine, he says, often operates to produce a denial of justice,-correctly
says that equity will interfere where deeds, certificates, and other
instruments given on sales for taxes are made by statute prima facie
evidence of the regularity of proceedings connected with the assessments
and sales. 3 Pom. Eq. Jur. 1399, and note 1, page 437, and authorities
there cited. And this view is sustained by numerous adjudged cases.
Huntington v. Railroad Co., 2 Sawy. 503, 514, Fed. Cas. No. 6,911;
Allen v. City of Buffalo, 39 N. Y. 386, 390; Palmer v. Rich, 12
Mich. 414, 419; Marquette H. & O. R. Co. v. City of Marquette, 35
Mich. 504; Milwaukee Iron Co. v. Town of Hubbard, 29 Wis. 51, 58;
Weller v. City of St. Paul, 5 Minn. 95 (Gil. 70, 81); Pixley v.
Huggins, 15 Cal. 133, 134; Tilton v. Railroad Co., 3 Sawy. 22, Fed.
Cas. No. 14,055. See, also, 2 Blackw. Tax Titles, 1066, and authorities
cited. In the present case there are no defects of a controlling
character that distinctly appear on the face of the tax deeds under
which the defendants claim title. And as those deeds are made by
statute prima facie evidence of title in the grantees named in them;
and as, therefore, the plaintiffs, if sued in ejectment by the defendants,
would be compelled, in order to defeat a recovery against them,
to resort to extrinsic evidence in support of their title, the deeds
in question constitute a cloud upon that title, to remove which
the plaintiffs may rightfully invoke the aid of a court of equity.
v. Braxton, 158 U.S. 375 (1895)]