Did California have to release its tax lien when a federal forfeiture order omitted it from the claims payable on sale?

Plain-English summary

California legal staff concluded that the Board was not legally required to release an unpaid tax lien merely because a federal forfeiture sale and title company wanted the lien cleared.

The Board had recorded a $3,876.85 lien in 1983. The federal government seized the property in 1990, and the district court's forfeiture order listed other liens for payment while barring unlisted claims. California had not been notified and was omitted.

Staff said the Board could release the lien as a courtesy, but the U.S. Marshal could pay only parties named in the order, so California should expect no sale proceeds whether or not it released. The memorandum suggested that a consistent full-payment release policy might encourage future court orders to account for Board liens.

Common questions

Was California's tax debt paid?

No.

Would keeping the lien produce payment from this sale?

No, because California was not listed in the court order.

Could the Board still release it?

Yes, as a discretionary courtesy to clear title.

Citations and references

• U.S. District Court forfeiture order — controlled the liens payable from sale proceeds
• U.S. Marshal's request — sought release to reassure the title company

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/170-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/170-0070.pdf

Original ruling text

State of California

Board of Equalization
Legal Division

170.0070

Memorandum
To:

Mr. Rick Slater
Supervisor of Collections, MIC:55

From:

Thomas Cooke, Staff Counsel
Legal Division - MIC:82

Subject:

REQUEST FOR RELEASE OF LIEN
REDACTED TEXT

Date:

October 19, 1993

Gary Jugum has requested that respond to your memorandum to him dated October 7, 1993 concerning the above taxpayers. The Board had filed a lien in Alameda County against the taxpayers in 1983 for a
$3,876.85 tax liability. Real property in Oakland belonging to one of the taxpayers had been seized in 1990 by the U.S. Government. A forfeiture order from the U.S. District Court specified that certain liens on the seized property would be paid upon its sale and all other claims would be barred. The Board was not advised of the seizure at the time and its lien was not included in those liens to be paid. The Board has now received a letter from the U.S. Marshall’s office advising of the seizure and the court’s order. The letter advises that the property is now to be sold and the title company has requested that the Board release its liens. The letter notes that “the property is over-encumbered with many state and federal tax liens.” The Marshall’s office has requested that the Board release its liens to make the title company “feel more secure.” There is no legal requirement that the board release liens until a tax liability has been paid. If the Board wishes to release liens as a courtesy to clear title, it may do so. If the Board adopted a policy whereby it would release liens only when the tax liability was paid in full, perhaps the Board would find that its liens would be ordered paid in court orders more often. The Board should not expect that it will be paid anything upon the sale of the property whether the liens are released or not. The Marshall is not authorized to disburse funds to any parties other than those listed in the court’s order. TJC:plh