Federal Tax Lien FTL Flashcards
Definition of Federal Tax Lien: What is a federal tax lien?
A legal claim against a taxpayer’s property when they neglect or fail to pay a tax debt. (IRC § 6321)
Creation of Federal Tax Lien: When is a federal tax lien created?
The lien arises when a tax assessment is made, and the taxpayer neglects or refuses to pay within ten days after notice and demand. (IRC § 6322)
Filing of Notice of Federal Tax Lien (NFTL): When is the NFTL filed?
The IRS files the NFTL to publicly notify creditors of the federal tax lien. (IRC § 6323)
Priority of Federal Tax Lien: What determines the priority of a federal tax lien among other creditors?
Generally, the priority is determined by the date of filing; however, certain exceptions apply. (IRC § 6323; Rev. Rul. 68-57)
Release of Federal Tax Lien: When is a federal tax lien released?
The lien is released when the tax liability is satisfied or becomes legally unenforceable. (IRC § 6325)
Subordination of Federal Tax Lien: What is subordination, and when can it occur?
Subordination allows other creditors to move ahead of the IRS’s position. It can occur under certain circumstances by agreement. (IRC § 6325(d); Rev. Rul. 65-299)
Discharge of Property from Federal Tax Lien: When can property be discharged from a federal tax lien?
Under specific conditions, property may be discharged from the lien, allowing clear title to pass to a new owner. (IRC § 6325(b))
Effect of Bankruptcy on Federal Tax Lien: How does bankruptcy affect a federal tax lien?
Generally, the lien continues in force, even in bankruptcy, attaching to property owned by the debtor. (11 U.S.C. § 522(c)(2); IRC § 6321)
Appealing a Federal Tax Lien: How can one appeal a federal tax lien?
Appeals can be made through the IRS Collection Due Process (CDP) hearing or equivalent hearing if timelines are missed. (IRC § 6320; Treas. Reg. § 301.6320-1)
