Federal tax liens, and the date that is not on them

0:27It attaches everything, and it starts at assessment

Start with what it attaches, which is everything.

26 U.S.C. 6321 is one sentence long, and the breadth is all in the last clause.

Where a person liable to pay any tax neglects or refuses to pay after demand, the amount, with interest, additions and costs, is a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to that person.

Everything the person owns, including what they acquire afterwards.

And 26 U.S.C. 6322 sets the moment. Unless another date is fixed by law, the lien arises at the time the assessment is made, and continues until the liability is satisfied or becomes unenforceable by lapse of time.

Now hear what assessment is. It's an administrative act inside the Internal Revenue Service. No county register records it, and nothing on any recorded document states it.

1:34Against a judgment creditor it counts from the filing

So that's the hidden date. Now here's the one that's yours.

26 U.S.C. 6323, subsection A, names four parties the lien can't touch until it's been filed. And one of them is you.

The lien imposed by section 6321 isn't valid as against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor, until notice meeting the requirements of subsection F has been filed by the Secretary.

So this reads opposite to the state tax warrant, where the statute can reach back to a date the docket doesn't show. Here the earlier date governs the world at large, and the filing date governs the people who search. A judgment lien creditor who docketed before the notice was filed is ahead of the United States on that property, whatever the assessment date turns out to have been.

Subsection B then carves out interests that beat the lien even after filing. A purchaser of securities, or of a motor vehicle, who had no actual notice. Those aren't readable from a register either, and they aren't about land.

2:51Where the notice goes, and what that means for a search

Then there's where the notice goes, and it isn't always one place.

Subsection F sends it to an office the state designates, and it splits real property from personal property.

For real property, one office within the state, county or other subdivision designated by that state's laws, where the property sits. For personal property, tangible or intangible, again one office designated by state law where the property sits. And where a state has designated no such office, the notice goes to the clerk of the United States district court for the district where the property is.

Two things follow for you. The county office that holds deeds is where a federal lien against land turns up, so an ordinary parcel search finds it. And a federal lien against that person's personal property may sit in a different office entirely, which your parcel search will never reach.

3:50The refiling window, and what a missed one does

Now, the refiling window. And what a missed one actually does, because it isn't what people assume.

Subsection G gives the notice a life, and letting it lapse changes its date rather than removing it.

The required refiling period is the 1 year period ending 30 days after the expiration of 10 years after the date of the assessment. And then a further 1 year period ending with the expiration of each following 10 years. Refiling has to happen in the office where the prior notice was filed, and for real property the fact of refiling has to be entered in the index.

So if the notice isn't refiled in that window, it's treated as filed on whatever later date it is filed. It doesn't vanish. It loses its place in the queue and rejoins at the back, behind everything recorded in the meantime.

And separately, 26 U.S.C. 6502 limits collection itself. Where the assessment was made in time, the tax may be collected by levy or by a proceeding in court only if that's begun within 10 years after the assessment. Subject to extensions for installment agreements and certain releases of levy.

5:07How to read one off a register

So how do you read one off a register.

Four things, and the first is the one everybody skips.

Read the notice itself, rather than the index line. The form states the assessment date and the last day for refiling, which are the two dates the rest of this turns on, and neither of them is the recording date.

Then compare the filing date of the notice against the docketing date of your judgment, because subsection A makes that comparison the one that decides priority between you.

Then check whether the last day for refiling has passed with nothing filed after it. A notice past its window hasn't been released, but it no longer holds its original date.

And treat the absence of a federal notice in a parcel search as evidence about that parcel only. The lien already attaches everything the person owns. What a county search tells you is whether it's been made good against people like you, there.

6:07What this does not cover

Here's what I can't tell you.

Whether the lien is valid, what it's worth, and most of what happens after you find one.

Assessment, demand and the taxpayer's administrative history are Internal Revenue Service records rather than public ones, and none of the dates on the notice can be verified from a register. 26 U.S.C. 6325 governs release and discharge of particular property, which is its own process with its own documents. The superpriorities in subsection B, the rules for a purchase money security interest, and the treatment of after-acquired property each turn on facts no index holds. And a certificate of release is a separate recorded instrument, so a notice appearing without one hasn't necessarily survived.

I'm not a lawyer and none of this is advice. Whether a federal tax lien stands ahead of your judgment, and what to do about one, are questions for counsel with the taxpayer's account transcript in front of them.

What I can tell you is narrower. The lien started on a day the document doesn't print. And against you, it counts from the day somebody walked it into a county office.

The state warrants run on their own scheme, and a couple of those dates behave the opposite way round to these. If you hold judgments in New York, read that one next.