Ezel / IRS Rulings / 201616010

Bank lien priority limited to original loan amount

Number
201616010
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
March 21, 2016
Publicly released
April 15, 2016
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 2016, 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 2016
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 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

The IRS considered the extent of a bank's lien priority outside bankruptcy. It advised that the bank's priority was limited to the original loan amount. Under section 6323(h)(1), the bank has a protected security interest only to the extent it parted with money or money's worth.

Ruling snapshot

  • Question: To what amount is the bank's priority limited under the federal tax lien rules?
  • Outcome: Advice given
  • Key authorities: IRC § 6323(h)(1)

Full text (IRS public release)

ID:      CCA_2016032111151814
UILC:    6323.00-00

Number: 201616010
Release Date: 4/15/2016
From:
Sent: Monday, March 21, 2016 11:15:18 AM
To:
Cc:
Bcc:
Subject: RE: Non-bankruptcy GL question


On these facts, I think the bank’s priority is limited to the original loan amount. Under
IRC 6323(h)(1), the bank is only deemed to have a “security interest” to the extent the
lender “has parted with money or money’s worth.”

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