CCA 200848027: IRS claim should be paid first when no competing state lien notice was filed

Number

200848027

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

Validity and Priority of Lien Against Mortgagees, Pledgees, Purchasers, and Judgment Creditors (Valid v. Invalid)

Topics

Procedure, penalties, and administration

Code sections

§ 6323

Ruling dated

July 8, 2008

Publicly released

November 28, 2008

Source

View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2008, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.

About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.

View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that a proposed pro rata payment plan was unacceptable when the United States had priority. If no notice of the competing state tax lien had been filed and no other facts gave it priority, the IRS claim had to be paid first. Counsel warned that the fiduciary could be personally liable under 31 U.S.C. § 3713(b) for amounts paid to another claimant before satisfying the federal claim. Counsel also proposed stronger language for the letter communicating that position.

Ruling snapshot

Question: How should the IRS address payment priority when no notice of a competing state tax lien was filed?
Outcome: Advice given. Reject a pro rata plan, demand payment of the federal claim first, and warn the fiduciary about possible personal liability.
Key authorities: IRC § 6323; 31 U.S.C. § 3713(b)

Full text (IRS public release)

ID: CCA_2008070813213047 Number: 200848027
Office: --------------
Release Date: 11/28/2008

UILC: 6323.00-00

From: ---------------------
Sent: Tuesday, July 08, 2008 1:21:33 PM
To: -----------------
Cc:
Subject: RE: 3713 issue

If no notice has been filed, then your letter could be made more forceful. We do agree that a pro-rata payment plan would be unacceptable. If the United States is not paid first, the fiduciary should be made well aware that he could be held personally liable for any amount paid to -----------------before our federal claim is satisfied under 31 USC section 3713(b).

If we know that no notice of the ------------------lien was filed, then we suggest the following instead of the second sentence in the second paragraph beginning with "Nonetheless, there is ....

"It is our understanding that no notice of the State -----------------------tax lien has been filed and we are aware of no other facts that would give the ------------------tax lien priority over our federal tax lien. Accordingly, the Internal Revenue Service must be paid first on its claim. "

I would also add "any additional" before "information" in the first sentence of the third paragraph.

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