CCA 201244016: Federal tax lien priority depends on assessment and state lien choateness

Number

201244016

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

State and Local Taxes and Liens

Topics

Procedure, penalties, and administration

Code sections

§ 6321, § 6323

Ruling dated

June 14, 2012

Publicly released

November 2, 2012

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 2012, 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 federal tax lien priority is determined by comparing the federal tax assessment date with the filing date of the state tax lien. The federal lien arises upon assessment, and filing a notice of federal tax lien is not required for validity against a state tax lien because state tax liens are not among the creditors protected by IRC § 6323. The state lien has priority if it was choate when the federal lien arose. For New York personal property, the lien is choate when filed with the appropriate County Clerk and the New York Secretary of State. For real property, filing in the county where the property is located is sufficient.

Ruling snapshot

Question: How is the priority of a federal tax lien determined against a New York state tax lien?
Outcome: Advice given
Key authorities: IRC § 6321 and § 6323

Full text (IRS public release)

ID: CCA_2012061409080450 Number: 201244016
Release Date: 11/2/2012
Office: ----------
UILC: 6321.03-23

From: -----------------------
Sent: Thursday, June 14, 2012 9:08:05 AM
To: ------------------
Cc: ------------------------------------------------------------------------------- Subject: RE: assistance w/-------

Sorry for the delay in responding. I’ve been out of the office on leave and just got back today.

The priority of the federal tax lien will be determined by the assessment date of the federal tax as compared to the filing date of the state tax lien. Filing a notice of federal tax lien is not required for a federal tax lien to be valid against a state tax lien, because state tax liens are not among the types of creditors protected by IRC 6323. The federal tax lien arises upon assessment. The priority of a state tax lien is determined by whether it was choate when the federal tax lien arose. A lien becomes choate when there is nothing more to be done to perfect it. In New York, a state tax lien is choate with respect to personal property when the lien is filed with the appropriate County Clerk and the New York Secretary of State. For real property, the lien must simply be filed in the county where the real property is located.

Please call me if you have any further questions about this matter.

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