Ezel / IRS Rulings / 1145019
Chief Counsel Advice 1145019 Released November 10, 2011 Advice

Releasing a lien does not prevent an offset against the underlying tax liability

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This page covers one taxpayer's ruling from 2011, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2011
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, 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's Office advice addressed whether the IRS could offset an overpayment against a tax liability for a year in which a lien had been released. It concluded that releasing a lien does not eliminate the underlying tax liability. The liability could therefore be collected by offset even if collection through other procedures would require a notice of deficiency. The memo also stated that an offset is not a levy action and could leave a pending Tax Court case without an unpaid liability supporting the proposed levy or lien.

Ruling snapshot

  • Question: Can the IRS offset an overpayment against a tax liability after releasing a lien for that liability year?
  • Outcome: Advice given.
  • Key authorities: IRC §§ 6402 and 6325; Rev. Rul. 2007-51; Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006); 26 U.S.C. § 6110(k)(3)

Full text (IRS public release)

ID: CCA_2011102510075726 Number: 201145019
Release Date: 11/10/2011
Office: --------------
UILC: 6402.01-00, 6325.00-00

From: -----------------
Sent: Tuesday, October 25, 2011 10:07:57 AM
To: ------------------
Cc:
Subject: 6402 Offset after Filing of Release of Lien

Hi -------- I agree. A release of a lien does not, by itself, affect the existence of a tax liability. The tax
liability legally exists independent of any procedural action on the part of the Service. An SNOD prepared
by the Service may show a tax liability exists (Rev. Rul. 2007-51) which means the liability may be
collected by offset without any assessment, notice and demand, or secret lien. A bal due return filed by a
taxpayer shows a tax liability exists as well. So, the tax liability for the release year may be offset with
another year’s overpayment even though to otherwise collect for the year of release the Service might
have to issue an SNOD; e.g., if an assessment based on the amount shown on return was abated after a
substantive, but now clearly mistaken, determination.

The offset isn't a levy action. If a CDP levy (or lien) action was pending in Tax Court for a liability year, a
subsequent offset with another year’s overpayment would result in the dismissal of case - because
there’s no unpaid tax liability upon which the proposed levy (or a lien) could be based - without the court
questioning the offset. Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006).

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