From
IRS Handbook - Instructions to Revenue Officers:
This information is intended as technical
information of use to consultants
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[105.1] 2.5.2 (09/26/96) When NOT to File a Lien
1.Do NOT file a Notice of Federal Tax Lien when:
A. The liability has been paid, is not correct
or credits are available to fully satisfy it.
B.Bankruptcy has been filed.
C.The taxpayer is a defunct corporation (unless assets are about
to be liquidated).
D.The taxpayer corporation has gone through liquidation.
E.An IMF taxpayer promises to full pay within 6 months (ACS only).
F.The taxpayer is deceased and there are no assets to be liquidated.
G.The taxpayer lives abroad and there are no known assets in the
United States.
1. Before the IRS files a Notice of Federal Tax
Lien:
the IRS must assess the liability
the IRS must send the taxpayer a notice and demand for payment
the taxpayer must neglect or refuse to fully pay the liability
within 10 days of notice and demand.
2. The IRS will issue a Release of the Notice
of Federal Tax Lien within 30 days after the taxpayer satisfies
the tax due or within 30 days after the IRS accepts a bond guaranteeing
payment.
3. A lien will release automatically if the IRS
does not refile the lien before the time expires to legally collect
the tax--usually a period of 10 days.
4. A taxpayer may sue the Federal government
for damages if the IRS knowingly or negligently fails to release
a Notice of Federal Tax Lien provided the taxpayer first exhausts
all administrative appeals within the IRS and the suit is filed
within 2 years from the date the IRS should have released the
lien.
5. Each application for a discharge of a tax
lien releases the effects of the lien against one specifc piece
of property. A Certificate of Discharge will be issued if the
taxpayer has other property, subject to the lien, that is worth
at least two times the total of the tax owed, plus any additions
to the tax owed and any other debts owed on the property (e.g.,
a mortgage).
6. A Certificate of Discharge will be issued
if the IRS receives the value of the government's interest in
the property and taxpayer is giving up ownership. A Certificate
of Discharge will also be issued if the property in question is
sold and there is a dispute as to who is entitled to the sale
proceeds, and the proceeds are placed in escrow while the dispute
is being resolved.
7. The IRS must withdraw a filed Notice of Tax
Lien if the notice was filed prematurely or not in accordance
with IRS procedures.
8. The IRS must withdraw a filed Notice of Tax
Lien if the taxpayer has entered into an installment agreement
to satisfy the liability.
9. The IRS must withdraw a filed Notice of Tax
Lien if the withdrawal will facilitate collection of the tax or
if the withdrawal would be in the best interest of both the taxpayer
(as determined by the Taxpayer Advocate) and the government.
10. A lien is incorrect and may be appealed if:
the taxpayer paid the entire amount owed before the lien was filed
the IRS assessed the tax and filed the lien when the taxpayer
was in bankruptcy and subject to the automatic stay during bankruptcy
the IRS made a procedural error in making an assessment
the statute of limitations expired before the IRS filed the lien.
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