Title Examination Standards
Chapter 1, App.
Chapter 25. Tax Liens
§25.1. The General Federal Tax Lien.

1. 1. The material in this chapter is subject to comparatively rapid change. Therefore, particular attention should be paid to the date of adoption as reflected in the history of each standard.
2. 2. Securities and motor vehicles as defined by 26 U.S.C.A. § 6323(h)(3) & (4) are not within the purview of Chapter 25.

3. 3. In addition, Chapter 25 does not deal with the Federal priority statute, 31 U.S.C. § 3713(a).

   Note: Although the special estate and gift tax liens are treated in Standards 25.2, 25.3 and 25.4, respectively, it is important to remember that such special tax liens are separate liens and are in addition to the general tax lien.

4. A. SCOPE.

   Any federal tax, with any applicable interest, penalties and costs, without notice and from the time of assessment, is a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to the person liable to pay the tax. Although the lien is effective as of the time of assessment, an enforceable general federal tax lien arises only when the following three events have occurred: (1) a tax assessment is made; (2) the taxpayer is given proper notice of the assessment and demand for payment; and (3) the taxpayer fails to pay the assessed taxes within ten (10) days after notice of assessment and demand for payment. The lien is not valid as to any purchaser, holder of a security interest, (under federal law, "security interest" means a lien on real or personal property), mechanic's lienor or judgment lien creditor until notice thereof has been filed for record in the office of the county clerk in which the land is located.

   Authority: 26 U.S.C.A. §§ 6321, 6322 & 6323. Comment: 1. Property subject to the general federal tax lien includes, but is not limited to, the taxpayer's interest in: a. After-acquired property, 42 O.S. § 8; Glass City Bank of Jeanette, Pa. v. United States , 326 U.S. 265, 66 S.Ct. 108, 90 L.Ed. 56 (1945). b. Property held in joint tenancy, 60 O.S. 1961 § 74; United States v. Brandenburg , 106 F.Supp. 82 (S.D. Cal. 1952). c. Homestead property, Tillery v. Parks, 630 F.2d 775 (10th Cir. 1980) (federal tax liens arising solely through the tax liability of a tax debtor may attach to the tax debtor's interest in the homestead property owned by the tax debtor) and United States v. Rodgers , 461 U.S. 677, 103 S.Ct. 2132, 76 L.Ed. 236 (1983). 2. Title 26 U.S.C.A. § 6323(b)(6) provides, in part, that even if notice of lien has been filed, the general federal tax lien will not be valid against the holder of (1) local liens for real property taxes, special assessments and charges for services provided by a government owned public utility, which, under local law, are entitled to priority over security interests which are prior in time to such local liens, assessments and charges, (2) mechanic's lien for repairs on a personal residence but only to a maximum amount of $5,000 and only in a building containing not more than four dwelling units and (3) attorney's liens to the extent an attorney holds a lien or contract enforceable against a judgment or other amount. Title 26 U.S.C.A. § 6323(c) provides, in part, a temporary priority for certain types of commercial financing for 45 days after a tax lien is filed. The relative priority of general federal tax liens against commercial transaction and financing agreements (including real property,construction financing) is fixed by 26 U.S.C.A. § 6323(d).

5. 3. The general federal tax lien does not have priority over a purchase money mortgage, United States v. New Orleans R.R., 79 U.S. (12 Wall.) 362, 20 L.Ed. 434 (1870); Slodov v. United States, 436 U.S. 238 (1978); Troyer v. Mundy, 60 F.2d 818 (8th Cir. 1932).
6. 4. The general federal tax lien is not valid against any purchaser, holder of a security interest, mechanic's lienor or judgment lien creditor until notice thereof has been properly filed. a. From 1913 to 1925, federal tax lien notices in Oklahoma were required to be filed in the office of the United States District Court for the judicial district in which the land was located, Act of March 4, 1913, 37 Stat. 1016, now 26 U.S.C.A. § 6323(f)(1)(A)(1). b. Subsequent to February 14, 1925, notices in Oklahoma have been and are required to be filed in the office of the county clerk of the county in which the land is located, 26 U.S.C.A. § 6323(f)(1)(A)(i). c. It is not necessary that the notice contain a description of the land thereby affected, Treas. Reg. § 301.6323(f)-1(c); United States v. Union Central Life Insurance Co ., 368 U.S. 291, 82 S.Ct. 349, 7 L.Ed. 2d 294 (1961). Note that 19 O.S. § 298 refers to conveyances, etc., but does not pertain to federal tax liens. d. Actual knowledge of the assessment of the general federal tax lien does not deprive a purchaser, holder of a security interest, mechanic's lien or judgment lien creditor of priority until the notice of the lien is filed, United States v. Beaver Run Coal Co ., 99 F.2d 610 (3d Cir. 1938). Some courts, though, intimate that actual knowledge may take the place of filing of notice. See annotation at 2 L.Ed. 2d 1845. However, actual knowledge affects the priorities as to securities, motor vehicles, personal property purchased in casual sales, insurance policy loans, passbook loans and commercial transaction financing under the provisions of 26 U.S.C.A. §§ 6323(b)(1), (2), (4), (9), (10) and 6323(c)(1). 5. A trustee in bankruptcy is a "judgment creditor" under the terms of 26 U.S.C.A. § 6323, United States v. Speers , 382 U.S. 266, 86 S.Ct. 411, 15 L.Ed. 2d 314 (1965). 6. Note United States v. McDermott , 507 U.S. 448, 113 S.Ct. 1526, 123 L.Ed. 2d 128 (1993), in which a federal tax lien was held to have priority over a previously filed judgment lien with respect to taxpayer's real property acquired after the filing of both liens.

7. B. DURATION.

   1. 1. Liens Assessed Prior to November 5, 1990. a. The limitation period for liens assessed prior to November 5, 1990 is six years and thirty days from the date of assessment. As to those liens for which the limitation period of six years and thirty days from date of assessment had run as of November 5, 1990, and for which the lien period had not been extended, suspended or renewed, the lien shall be deemed to have expired. b. As to those liens for which the limitation period of six years and thirty days from date of assessment had not run as of November 5, 1990, the lien period shall be ten years and thirty days from date of the original tax assessment. 2. Liens Assessed On or After November 5, 1990.

      As to those liens filed on or after November 5, 1990, the lien period shall be ten years and 30 days from the date of assessment.

      Authority: 26 U.S.C.A. §§ 6322, 6502 & 6503.

      Caveat: The elapse of the applicable statutory period for the general federal tax lien does not, in itself, constitute conclusive evidence that the lien has expired. The examiner should be aware of the various methods, set out in the statute, by which the applicable limitation period may be extended or suspended, and the general federal tax lien may be renewed. Examples of some of these methods are set out below. Comment: The effective period of a lien may be extended, and the running of such period may be suspended. For example, the effective period may have been extended or suspended: (1) by written agreement with the taxpayer, 26 U.S.C.A. § 6502(a); (2) by waiver of the statute of limitation by the taxpayer pending acceptance or rejection by the government of a compromise offer; (3) for the period during which assessment or use of creditors' process was prohibited (and while a related proceeding is on the docket of the Tax Court) and for sixty (60) days thereafter, 26 U.S.C.A. § 6503(a)(1); (4) for the period during which assets of the taxpayer were in the control or custody of any court and for six (6) months thereafter, 26 U.S.C.A. § 6503(b); (5) for the period during which collection is hindered or delayed by the fact that the taxpayer is outside of the United States, if such absence is continuous for a period of at least six months (such period not to expire until six (6) months after the date of return to the United States), 26 U.S.C. § 6503(c); (6) for the period, not in excess of two years, from the date of instituting bankruptcy or receivership proceedings to thirty (30) days after the notice from the receiver or other fiduciary is given, 26 U.S.C. § 6872; (7) for the period equal to the period from the date property of a third party is wrongfully seized or received by the Secretary to the date the Secretary returns the property or the date on which a judgment secured pursuant to 26 U.S.C. § 7426 with respect to such property becomes final, and for thirty (30) days thereafter, 26 U.S.C.A. § 6503(f); (8) as to estate taxes, for the period of any extension of time for payment granted under the provisions of 26 U.S.C. § 6161(a)(2) or (b)(2) or under the provisions of 26 U.S.C. §§ 6163 or 6166, see 26 U.S.C. § 6503(d); or (9) as to Title 11 cases, for the period during which the Secretary is prohibited by reason of such case from making the assessment and for sixty (60) days thereafter, 26 U.S.C. § 6503(h). Various statutory provisions also suspend the running of time on account of military service, 50 U.S.C. App. § 573 (Soldiers' and Sailors' Civil Relief Act); 26 U.S.C. § 7508. The period during which a tax may be collected by levy is not extended or curtailed by reason of a judgment against the taxpayer, 26 U.S.C. § 6502(a). A general federal tax lien may be renewed by refiling the Notice of Federal Tax Lien. In order to maintain the enforceability of the lien from date of assessment through the renewal period, a notice of lien must be refiled within the one-year period ending thirty days after the expiration of the applicable six or ten year period discussed above. If the Notice of Federal Tax Lien is not refiled during this period, the lien shall be deemed to have expired at the end of the applicable limitation period. Provisions exist in the statute for a second and subsequent renewal of the lien period by a second refiling of the notice of lien within the time periods set out in the statute. 26 U.S.C.A. § 6323 (g). Caveat: A notice of lien may be refiled after the last refile date stated on the face of the notice of lien, in instances in which the limitation period on collection after assessment has not expired. In such instances, the notice of lien refiled after the last stated refiling date shall be effective from the date of such refiling. 26 U.S.C. § 6325(f)(2).

   The general federal tax lien continues until it is satisfied or becomes unenforceable by reason of lapse of time.

   The limitation period for such liens is generally as follows:

8. C. RELEASE AND DISCHARGE.

   A certificate of release, discharge, subordination or non-attachment of any internal revenue lien generally may be relied upon by a bona fide purchaser, holder of a security interest, mechanic's lien or judgment lien creditor for value, as conclusive that the entire lien has been released or that the lands described in the certificate have been discharged from the tax lien.

   Authority: 26 U.S.C. § 6325(f). Comment: 1. The issuance of such a certificate is not conclusive in all cases that the lien is extinguished. The certificate may be revoked for reasons cited in 26 U.S.C. § 6325(f)(2). It is not conclusive that the tax liability has been paid and, in the hands of the taxpayer, such property may still be subject to a lien upon notice and refiling, 26 U.S.C. § 6325(f)(3). Reliance by the taxpayer upon such certificate is a mistake of law by which the government may not be estopped, Miller v. Commissioner, 23 T.C. 565 (1954), aff'd., 231 F.2d 8 (5th Cir. 1956). In the hands of a transferee as defined in 26 U.S.C. § 6901, the property may still be subject to tax liability, Commissioner v. Angier Corp., 50 F.2d 887 (Ist Cir. 1931), cert. denied , 284 U.S. 673, 52 S.Ct. 129, 76 L.Ed. 569 (1931). 2. A certificate of release of a lien may be issued if either of the conditions set forth in 26 U.S.C. § 6325(a)(1) or (2) is met. 3. A certificate of discharge of property may be issued if any one of the conditions set forth in 26 U.S.C.A. § 6325(b)(1), (2) or (3) is met. 4. A certificate of subordination may be issued if the conditions set forth in 26 U.S.C. § 6325(d)(1), (2) or (3) is met. 5. A certificate of non-attachment may be issued where, because of a confusion of names or otherwise, a notice of lien has been filed, and the lien is clouding title to property belonging to a person other than the taxpayer, 26 U.S.C. § 6325(e).

CAVEAT

History: This standard was reworked completely and its adoption recommended by the Report of the Title Examination Standards Committee, 57 O.B.J. 2677, 2682-85 (1986). It was approved by the Real Property Section, November 20, 1986, and adopted by the House of Delegates, November 21, 1986. The 1994 Report of the Title Examination Standards Committee recommended amending Section B of the standard to reflect 1990 amendments to the Internal Revenue Code and adding Comment 6 to Section A. 65 O.B.A.J. 3334 (10/22/94). The Committee's recommendation was approved by the Real Property Section on November 17, 1994, and adopted by the House of Delegates on November 18, 1994.

In 1995, the Report of the Title Examination Standards Committee recommended amending Comment 1,c, to clarify the synopsis of the case holding cited there. 66 0.B.J. 3256, 3258 (10/21/95). The Real Property Law Section approved the Committee's recommendation on November 9, 1995; the House of Delegates adopted the amendment on November 10, 1995, 66 0.B.J. 3751 (1995).

In 2003, the Report of the Title Examination Standards Committee recommended adding Part 3 to the introductory Caveat to Standard 25.1A, and various amendments to both clarify and reflect changes in federal law. 74 O.B.J. 2801 (10/11/03). The Real Property Law Section approved the Committee's recommendation on November 13, 2003; the House of Delegates adopted the amendments on November 14, 2003. 74 O.B.J. 3231 (11/22/03).