IRS Issues Proposed Regulations Relating to the Validity and Priority of Federal Tax Liens
| IRS Issues Proposed Regulations Relating to the Validity and Priority of Federal Tax Liens |
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The IRS stated that §6323 provides that a federal tax lien is only valid against certain persons if a notice of federal tax lien (NTFL) is filed and that the statute addresses the validity and priority of the lien against such persons. The IRS noted that, since 1976, there have been many amendments to §6323 that are not reflected in the current regulations. REG-141998-06, 73 Fed. Reg. 20877 (4/17/08): Proposed regulations update and amend various regulations relating to the validity and priority of federal tax liens under §6323. Discussion: The IRS stated that §6323 provides that a federal tax lien is only valid against certain persons if a notice of federal tax lien (NTFL) is filed and that the statute addresses the validity and priority of the lien against such persons. The IRS noted that, since 1976, there have been many amendments to §6323 that are not reflected in the current regulations. The IRS stated that certain dollar limits under §6323(b) (describing certain interests for which a lien is invalid even though an NFTL has been filed) have been increased and are indexed annually for inflation. The IRS noted that the proposed regulations update the relevant regulations to make the dollar limits consistent with those applicable under §6323(b). Likewise, the proposed regulations amend the dollar limit in Regs. §301.6323(b)-(1)(d)(3), Ex. 3, for consistency. The proposed regulations, stated the IRS, remove Regs. §301.6323(b)-1(j) dealing with protection for passbook loans. The IRS stated that the proposed regulations allow Form 628 (the form that serves as an NFTL) to be filed either in paper or electronic form, and define transmission by fax and email as electronic filings. The IRS noted that the regulations as amended reflect the IRS's authority to electronically file NFTLs in all situations without obtaining a state's permission. The proposed regulations provide that with respect to an NFTL with a certificate of release, failure to timely refile the NFTL in any jurisdiction where it was originally filed extinguishes the lien. Furthermore, the proposed regulations provide that when an NFTL is filed in multiple jurisdictions, certificates of revocation and new NFTLs must be filed in all of the jurisdictions for the lien to be reinstated. The proposed regulations also update various provisions throughout Regs. §301.6323 to contemporize dates and remove unnecessary language, noted the IRS. Additionally, stated the IRS, the proposed regulations incorporate the changes made by the Uniform Commercial Code, providing that a security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing. The proposed regulations are proposed to generally apply with respect to any NFTL filed on or after the date the regulations are published as final regulations in the Federal Register. |
