5.12.7  Notice of Lien Preparation and Filing

Manual Transmittal

October 28, 2013

Purpose

(1) This transmits the new IRM 5.12.7, Federal Tax Liens, Notice of Lien Preparation and Filing.

Background

A revision of the IRM 5.12 chapter has been done to consolidate and coordinate like topics, reduce duplication of content, and provide an overview, cross-references, and contacts.

Material Changes

(1) Introduces new IRM with title of Notice of Lien Preparation and Filing which identifies the content contained in this IRM.

(2) The following table provides a cross walk of sections MOVING TO IRM 5.12.7 FROM other IRM 5.12 location(s)

Moving from ____ to IRM 5.12.7
5.12.2.6 - 14
5.12.2.19
5.12.2.21
Exhibit 5.12.2-1
Exhibit 5.12.2-4
5.12.6.3.1 - 9
5.12.6.3.11 - 14
5.12.6.7 - 8
5.12.6.9.1

(3) IRM sections reorganized and consolidated from previous content locations to provide better clarity for the user.

(4) Duplicate material incorporated, combined, or deleted for sections with similar material.

(5) 5.12.7.2 Adds a new section titled "How the Lien Notice Document Is Constructed"

(6) 5.12.7.3(16) Adds an instruction on how to prepare a Notice of Federal Tax Lien (NFTL) when there are more partners than can fit on the face of the NFTL document.

(7) 5.12.7.5.5 adds a new section to address NFTL filing where a substitute for return (SFR) module contains a subsequently filed return converting the module's filing status to married filing joint.

(8) 5.12.7.5.6 Adds a new sub-section for Consolidated Groups

(9) 5.12.7.6 Special Condition NFTLs section revised to update the instructions to better clarify the topic. An Illinois Land Trust example added. A reminder added that a taxpayer NFTL should also be filed in those locations where a special condition NFTL is filed.

(10) 5.12.7.6.4.1 Adds instruction to ensure a taxpayer NFTL is filed in any location that a special condition NFTL is filed.

(11) 5.12.7.6.5 Instructs that Letter 3172 notification be used when Collection Due Process (CDP) rights are afforded a taxpayer for an NFTL and special condition NFTL filing.

(12) 5.12.7.6.7(2) Adds a records control requirement for Special Condition files.

(13) 5.12.7.6.7(5) Adds instruction regarding withdrawal of special condition NFTL.

(14) 5.12.7.7.1(5) Adds instruction that the Transaction Code (TC 582) lien indicator and TC 360 filing fee must be posted manually by the initiator when a lien notice is filed less than 10 days after assessment.

(15) 5.12.7.7.3 Adds a new sub-section to address NFTL filing for Offshore Voluntary Disclosure Initiative (OVDI) assessments.

(16) 5.12.7.7.4 Adds a new sub-section to address NFTL filing on restitution-based assessments by incorporating Interim Guidance SBSE-05-0713-0059, Filing Notices of Federal Tax Lien on Restitution-Based Assessments.

(17) 5.12.7.8 Adds clarification for revenue officers filing NFTL for taxpayers living abroad.

(18) 5.12.7.8 Corrects operating division acronym from LMSB to LB&I.

(19) Filing Fee Abatements, relocated in IRM 5.12.3.2.1 as being more in line with actions associated with releases. The sub-section on Designated Payment Codes relocated to IRM 5.12.7.12.4.

(20) Exhibit 5.12.7-2, State Filing Locations, has been updated based on changes in local filing circumstances and to add the United States Territories.

(21) Exhibit 5.12.7-3, Restitution NFTL, adds example of this NFTL type.

Effect on Other Documents

This material supersedes IRM 5.12.1, dated January 9, 2009, IRM 5.12.2 dated March 8, 2012, IRM 5.12.3 dated June 1, 2010, IRM 5.12.6 dated July 16, 2010, and Interim Guidance SBSE-05-0713-0059, Filing Notices of Federal Tax Lien on Restitution-Based Assessments dated July 19, 2013.

Audience

SBSE and W&I Collection, Centralized Lien Operation, and Appeals

Effective Date

(10-28-2013)

Michelle C. Alvarado
Acting Director, Collection Policy
Small Business/Self Employed Division

5.12.7.1  (10-18-2013)
Purpose

  1. Notices of Federal Tax Lien (NFTL) fulfill the requirement of IRC § 6323 for providing evidence to the creditors listed in IRC § 6323 of the statutory lien's existence and its effect on the taxpayer's property based on the filing date of the NFTL.

  2. The purpose of this IRM is to convey instructions for preparing and filing Notices of Federal Tax Lien.

5.12.7.2  (10-18-2013)
How the Lien Notice Document Is Constructed

  1. The first thing to remember about a lien notice is that it can contain as many as 15 statutory liens (assessments) on one notice.

  2. The name must properly identify whose statutory lien is being noticed. See IRM 5.12.7.5 for a discussion on name line considerations.

  3. There are two important statements on the lien notice. They are the notice purpose and the self-release clause.

  4. In bold print at the top of the lien notice, Form 668 (Y) (c), is the statement declaring that statutory liens exist, the reason for filing the notice, and what the statutory liens attach to: "As provided by section 6321, 6322, and 6323 of the Internal Revenue Code, we are giving a notice that taxes (including interest and penalties) have been assessed against the following-named taxpayer. We have made a demand for payment of this liability, but it remains unpaid. Therefore, there is a lien in favor of the United States on all property and rights to property belonging to this taxpayer for the amount of these taxes, and additional penalties, interest, and costs that may accrue."

  5. After the taxpayer name and address the notice contains the self-release clause. Once the clause is executed, it has the effect of releasing both the underlying statutory lien and the lien notice: "IMPORTANT RELEASE INFORMATION: For each assessment listed below, unless notice of the lien is refiled by the date given in column (e), this notice shall, on the day following such date, operate as a certificate of release as defined in IRC 6325(a)" .

5.12.7.3  (10-18-2013)
Preparing the NFTL General Instructions

  1. It is important that the information to be used when filing an NFTL is correct and that the NFTL is prepared and filed timely. This is the responsibility of the person assigned the balance due account.

  2. Revenue officers at the GS-9 level and above have the authority to issue Form 668(Y)(c). All lien delegations are found in Delegation Order 5-4 found in IRM 1.2.44.5. The employee’s name and identification number should be typed in the lower portion of the form and the title inserted in the appropriate block.

  3. Signatures are not required. However, documents generated by the Automated Lien System (ALS) have facsimile signatures.

  4. Part of NFTL preparation includes determining the last known address and any changes of address for taxpayers in order that Collection Due Process (CDP) and Power of Attorney (POA) notices are issued correctly.

  5. Individual joint liability taxpayers where spouses are separated or divorced may each have a separate address and a separate POA.

    Reminder:

    It is important to ensure that all parties are appropriately informed of the lien notice filing and any associated CDP rights. See IRM 5.12.6, Appeals Processes Involving Liens.

  6. If you have verified a change of address, be sure to update ENMOD to ensure IDRS and Master File reflect the taxpayer's most current data.

  7. When encountering PO Box addresses during the NFTL preparation process, check for alternate addresses to ensure that NFTLs are filed with all appropriate recording offices.

    • A CDP notice should be mailed to both a PO Box as the "last known address" and the physical address identified. See IRM 5.12.6, Appeals Processes Involving Liens.

    • There have been occasions where a taxpayer will secure a post office box (PO Box) in a county other than their county of residence and then use that PO Box as the address on their return.

    • Take particular note of the correct filing location where a post office district reflects the mailing address in one county but due to local changes over time the actual property location is physically in another county. An NFTL must be filed with the recorder where the property is located.

  8. Revenue officers will use ICS to prepare NFTLs for cases in their inventories, except NFTLs with special conditions (see IRM 5.12.7.6).

  9. Revenue Officers have the ability to create modules on ICS for cases assigned to them but if problems are encountered, the Group managers will ensure that modules requiring NFTLs are created on ICS for:

    1. periods that are not assigned to the revenue officer, or

    2. do not exist on ICS.

  10. Revenue officers will use the ICS lien notice template to create lien notices that require expedited processing, i.e., prompt assessments and/or jeopardy or termination situations.

    Reminder:

    Revenue officers need to ensure manually prepared lien notice documents redact the first five numbers of any Social Security Number (SSN).

  11. Employees needing to adjust the taxpayer's name will NOT include SSNs in the name field. SSNs must be redacted and ALS cannot identify and redact an SSN located in the name field.

  12. If the lien notice is being filed on a joint name line, both names must appear on the first name line. Use "and" or "&" between the names. This ensures both parties receive a CDP notice. Additional information can be found in IRM 5.19.12.2.2. This information can also be found in the entity section of the ALS User Guide Chapter Four.

  13. NFTLs must show the taxpayer's last known address. Employees will NOT include SSN's in the street address field. The word "Local" will be used ONLY if it is part of the street name. "Local" alone is not sufficient for mailing purposes. Further, a city, state and zip code, must be input to the appropriate data fields.

  14. Multiple statutory liens (assessments) against the same taxpayer may be included on one Form 668(Y)(c). Because single and joint liabilities do not belong on the same lien notice, exceptions that come up when there is a joint entity taxpayer are noted below.

    Exception:

    When one or more of the balance dues are Master File Tax (MFT) 55 assessments and the taxpayer is a joint entity. In this circumstance the MFT 55 assessments, which are assessed against one individual, must go on a separate lien notice under the liable taxpayer's name. MFT 55 assessments cannot be listed on the same NFTL with a non-liable party

    Exception:

    Lien Notices with MFT 31 modules should not be filed using a joint name line. Use "MFT31" as the tax type (MFT) when inputting NFTLs on MFT31 modules.


    Otherwise:

    If Then
    there are one or more statutory liens (balance due modules) prepare a separate entry in every column for each module. The dollar amount for each unpaid statutory lien (balance of assessment) will be shown.
    there are multiple statutory liens (assessments) within one balance due module show the assessment dates and the balance of all statutory liens (unpaid assessments) including those penalties which carry a separate collection statute.
    an accrued amount on an existing assessment remains outstanding and the assessed amount is paid file an NFTL on the total accrued amount as of the date the NFTL is requested.
    the taxpayer’s name on the statutory lien (balance due) is incorrect the NFTL should state the taxpayer’s name correctly. Take the actions necessary to correct master file.

    Note:

    There may be instances when the name on the NFTL does not agree with what is on the balance due (e.g., if the statute has been extended on one taxpayer on a joint assessment, only the name of the still liable taxpayer should appear on the NFTL).

    the statutory lien (balance due) entity shows the name of a third party, (e.g. accountant, attorney, etc.), and an NFTL is being filed attempt to identify the address of the taxpayer for use when filing the NFTL. If the address of the third party is used, do not show the name of the third party in the entity section. An NFTL name line should never show the name of a third party, the names of corporate officers, or the names of LLC members when the LLC is the liable taxpayer. When dealing with a "c/ o" be sure that the name and address on the NFTL is that of the taxpayer.
  15. A joint NFTL may be filed if a module changes from separate to joint filing status. This might occur if there has been an SFR assessment for an individual and they subsequently file a joint return with a spouse. The reason a joint NFTL may now be filed is because both spouses, by signing a joint return, have accepted responsibility for the liability on the module. Any previously existing NFTL for one of the spouses, filed prior to the status changing to joint, cannot be amended to add the joining spouse. A new NFTL listing both spouses would need to be filed. If filing against the joint name is prohibited (e.g. bankruptcy of one spouse only), file the new NFTL listing only the joining spouse. See also IRM 5.12.7.5.5.

  16. A partnership NFTL where employment taxes are involved, should be prepared showing the words "a partnership" after the partnership name and list the names of known general partners (e.g., XYZ, a partnership, A, a partner, B, a partner, C, a partner).

    • When a general partner is listed on the NFTL, a copy of L3172 must be provided to both the partnership and the general partner. See IRM 5.12.6, Appeals Processes Involving Liens.

    • If there are more partner names which must be on the NFTL than can fit in the space for an ALS created NFTL nameline, then an ICS manual NFTL needs to be used. The manual NFTL provides the ability to add a second page which can then list the partners which did not fit on the face of the NFTL document.

    • File an NFTL in the jurisdiction where each general partner resides as well as where the partnership is located. When the place of filing changes, file a separate NFTL, i.e., file two NFTLs if the partnership and one of the general partners lives in a different jurisdiction, etc. Provide multiple address information to CLO, if appropriate, or create the NFTL. See also IRM 5.12.7.5.2.

  17. A corporation NFTL should have the words "a corporation" after the corporate name, e.g., XYZ, Inc., a corporation. When the NFTL request is processed through ALS, the descriptor will automatically be added when "corporation" is the entity type selected. The phrase must be added when the NFTL is not processed through ALS.

  18. A Form 2290, Heavy Highway Vehicle Use Tax Return NFTL should be prepared using the period beginning date (e.g. 07-01-2012) rather than the ending date (e.g. 06-30-2013). This is very important when there is more than one period for a specific TIN. The period beginnings must be used to separate each assessment to ensure that we receive the module satisfaction indicator from the master file when each module is satisfied.

5.12.7.3.1  (10-18-2013)
Creating the Notice of Federal Tax Lien, Form 668(Y)(c)

  1. Notices of Federal Tax Lien (except estate tax liens) will be filed through the ALS.

  2. Generally lien notices are systemically created in ALS from ICS or ACS data uploads. When this is the case use the appropriate ICS (ICS User Guide, Chapter 13, Federal Tax Lien) or ACS (IRM 5.19.4.6) NFTL request process.

  3. ICS users should update any incomplete address on ICS prior to requesting the lien notice through ICS. Revenue officers must check their ICS notifications daily for rejects. Rejects must be resolved and the NFTL reinput. Failure to follow these procedures will result in an NFTL not being filed.

  4. When the NFTL request cannot be completed systemically, complete Form 12636, Request for Filing or Refiling Notice of Federal Tax Lien and secure email the form to the appropriate CLO team.

  5. If ALS is used to create the lien notice, follow instructions in the ALS User Guide which can be accessed from the Automated Lien System web site.

  6. ALS systemically redacts a portion of the SSNs on original lien notice filing requests issued after January 2006. Releases, withdrawals, revocations, etc., associated with NFTLs issued prior to January 2006 were issued with full SSNs. Effective January 2008, SSNs were partially redacted (xxx-xx-1234) on all documents sent to recording offices, including those where the original document was recorded with the full SSN.

  7. DO NOT request NFTLs with SSNs or "Local" in the street address line, numbers (e.g., 12222) without a street name; a blank street name, etc.

  8. ROs need to check their ICS notifications daily for rejects. Rejects must be resolved and the NFTL reinput. Failure to follow these procedures will result in an NFTL not being filed. ALS will reject to the originator:

    1. any NFTL with an incomplete address.

    2. any lien notice request that does not have a current valid assessment date or is requested less than 10 days after assessment. Revenue officers must not use projected assessment dates when requesting NFTL. Not filing an NFTL less than 10 days after assessment is a precaution. The establishment of the statutory lien requires that the taxpayer has received notice and demand and has neglected or refused to pay (IRC § 6321). Without the statutory lien a Notice of Federal Tax Lien cannot be filed.


    If an NFTL is rejected by the recording office, CLO will secure e-mail the originator, attach a copy of the rejected document and explain the reason for the rejection.

  9. The following information is used to create and maintain lien notice information in ALS:

    1. Entity information: taxpayer identification number, name and address, as well as the name control.

    2. Tax assessment information: MFT, tax period, assessment date, taxpayer identification number, last date for refiling, and the unpaid balance of assessment.

    3. Recording Office information: place of filing and the recording office address.

    4. Administrative information: employee name, assignment number, phone number and location.

  10. If the user does not have access to ICS, ACS, or the ALS permissions to file or refile an NFTL, submit the request by secure E-mail to Centralized Lien Operation (CLO). See Form 12636, Request for Filing or Refiling a Notice of Federal Tax Lien and IRM Exhibit 5.12.1-1 for the ALS Permissions chart.

  11. CLO will complete requests received from revenue officers, Advisory, Insolvency, and other delegated functions. These requests from revenue officers should be rare and restricted to instances where the revenue officer does not have access to ICS or the lien notice cannot be filed through ICS, i.e., there is a access computer problem or some other impediment to access. Requests for lien notice filings from Advisory and Insolvency will also be limited because of existing ALS permissions in these functions to create lien notices and other lien documents created through ALS. See IRM Exhibit 5.12.1-1 for the ALS Permissions' chart.

    Note:

    Amended and nominee/alter ego/transferee lien notices may require special handling, such as the suppression of the collection due process notice. Sufficient information will be input to ALS to ensure the appropriate CDP notice is generated.

5.12.7.3.2  (10-18-2013)
Requesting NFTLs Using Form 12636

  1. There are several types of employees who do not have cases assigned to them on ICS or ACS such as employees in the walk-in, correspondence, Appeals, Examination (Innocent Spouse examiners) and toll free areas. These and other employees may be able to research lien notice information using ALS, but do not have the capability to create documents in ALS or systemically request them.

  2. For those employees needing to file lien notices who either do not have access or the special conditions for the lien notice do not fall within normal parameters, the Form 12636 is used to provide the needed information to CLO in order for them to create the needed document in ALS. Form 12636 is a PDF fillable form which can be saved to your computer and is found through the publishing catalog.

  3. Send Form 12636 by secure E-mail to CLO for preparation of NFTLs.

    Note:

    There is also an ICS Template for ICS users.

  4. Prior to submission the requesting employee will review Form 12636 to determine if all the information required to prepare the NFTL, including name and telephone number of the contact person for generation of the CDP notice, has been provided. This information is not available in CLO.

    Note:

    The lien unit may contact the requester for additional information, if necessary.

  5. The employee requesting the NFTL will provide the entity information regarding any co-obligors (e.g. spouse, partners, etc.) and POA.

  6. Requests received by CLO will be input to ALS within 5 business days of receiving the request.

  7. ACS Support has responsibility for CDP follow up for walk-in, correspondence, Appeals, Examination (Innocent Spouse examiners), and toll free areas.

  8. Employees with ALS access may research ALS using the taxpayer's TIN to determine if the NFTL has been created.

5.12.7.4  (10-18-2013)
Manual NFTL Preparation

  1. In certain exigent circumstances, an NFTL may need to be filed more quickly than it can be when using ALS systemic print and mail delivery process. These situations necessitate the NFTL being manually prepared and personally delivered to the recording office.

  2. A manually prepared NFTL can only be done through either ALS by skipping the systemic print and mail process or through ICS. In each situation the manual NFTL is manually printed and hand delivered.

  3. As a general rule, these manual preparations are done by revenue officers who are personally carrying the NFTL to the recorders for filing.

  4. Manually prepared and hand carried NFTLs will be kept to a minimum.

    Reminder:

    Redact the Redact the first five numbers of the SSNs.

5.12.7.4.1  (10-18-2013)
Manually Prepared NFTLs Without ICS

  1. Employees who need to prepare an NFTL for immediate filing and who do not have access to ICS, need to either generate a SLID (Serial Lien Identification) number on ALS or contact CLO to secure a SLID.

  2. The employee will create the lien notice on ALS by inputting all required information. If the employee does not have ALS input capabilities, secure e-mail Form 12636 to CLO requesting that a SLID be issued immediately. See also IRM 5.12.7.6.4.5.

  3. Request that the printing of the NFTL be suppressed before the SLID is generated. If printing is not suppressed, a duplicate lien notice will be systemically generated.

    Reminder:

    CDP notices must be addressed as they will not be systemically generated for manually prepared lien notices outside of the ICS and ALS system.

  4. Type the lien notice information, including the SLID number obtained from ALS, into Form 668(Y)(c).

    Note:

    Only SLID numbers generated by ALS will be used on NFTLs. Employees will not create (make-up) SLID numbers. NFTLs issued without systemically generated numbers will not be released by ALS.

    This is important because IRC § 6325 requires that liens be released within 30 days of being satisfied or becoming unenforceable.

  5. Print the NFTL on your local printer.

  6. Make arrangements with a field employee, to have the NFTL hand carried to the recording office. Recording fees are to be paid by the employee and added to the employee's travel voucher for reimbursement UNLESS the filing fee exceeds normal costs AND the recorder accepts the billing support voucher (Form 3982). If the recorder accepts the Form 3982, instruct the recorder to fax the billing voucher to the CLO for payment.

    Note:

    Almost all recording offices are paid by Electronic Fund Transfers (EFT). CLO, in the past, arranged with some recording offices to allow ROs to add NFTL fees to the billing invoice. You will need to speak with the CLO team responsible for your area to determine if a similar method is still available. If so, provide the recording official with Form 3982, Billing Support for Lien and Certificate Fees.

  7. After filing, the stamped document will be returned to the originator, who is responsible for inputting recording data on ALS within 4 calendar days of filing the NFTL. If the employee does not have ALS input capabilities, the complete recording information must be sent via secure e-mail to CLO with the request that it be input to ALS.

    Reminder:

    If recording information is not input to ALS, timely lien release may not occur.

5.12.7.4.2  (10-18-2013)
Manually Prepared NFTLs Using ICS

  1. Revenue officers hand carrying NFTLs for immediate filing will select the manual ICS lien notice process on the ICS system to receive a SLID notification via ICS to prepare NFTLs prior to requesting the NFTL. An ICS systemically created SLID is recognized by ALS.

    Note:

    CDP notices are systemically generated by ALS for ICS manually prepared lien notices. If there is a concern that the CDP notice will not be received within five business days of the NFTL filing, consider manual issuance of the CDP notice(s). See IRM 5.12.6, Appeals Processes Involving Liens.

  2. Type the lien notice information, including serial number obtained from ICS, into the ICS template, Form 668(Y)(c).

    Reminder:

    Only SLID numbers generated by ICS or ALS will be used on NFTLs. Revenue officers will not create (make-up) SLID numbers. NFTLs issued without systemically generated numbers will not be released by ALS. Refer to the ICS User Guide for assistance or contact your manager.

  3. Print the ICS template NFTL on your local printer.

  4. When hand carried to the recording office, recording fees are to be paid by the employee and added to the employee's travel voucher for reimbursement UNLESS the filing fee exceeds normal costs AND the recorder accepts the billing support voucher (Form 3982, Billing Support for Lien and Certificate Fees). If the recorder accepts the Form 3982, instruct the recorder to fax the billing voucher to the CLO for payment.

    Note:

    Almost all recording offices are paid by Electronic Fund Transfers (EFT). CLO, in the past, arranged with some recording offices to allow ROs to add NFTL fees to the billing invoice. You will need to speak with the CLO team responsible for your area to determine if a similar method is still available. If so, provide the recording official with Form 3982.

  5. Revenue officers are responsible for inputting recording data within 4 calendar days of filing the NFTL. If the RO does not have ALS input capabilities, the complete recording information (including the taxpayer's name and TIN or the NFTL SLID) must be secure e-mailed to CLO for ALS input.

    Note:

    If recording data is not input to ALS, timely lien release may not occur.

5.12.7.5  (10-18-2013)
Name Line Considerations When Preparing NFTL

  1. The name line of the lien notice identifies for creditors whose statutory lien we are noticing them about. The name has to be accurate enough for creditors to appropriately recognize and understand what property is encumbered. This section discusses entity considerations that need to be kept in mind when preparing NFTL for filing.

5.12.7.5.1  (10-18-2013)
Use of Trade Names

  1. The abbreviation ‘d/b/a’ for ‘doing business as’ should be used only when an individual is actually doing business as a sole proprietor under a trade name, e.g., Edwin E. Kelly d/b/a Kelly’s Garage. The abbreviation should never be used in a partnership situation.

  2. The same degree of care should be exercised when using the abbreviation ‘t/a’ for ‘trading as’. This is used where a corporate, partnership, or LLC entity operates under a trade name other than the corporate, partnership, or LLC name, e.g., Werk Hard, Inc., t/a The Diggers.

    Caution:

    When the owner of an LLC is the liable taxpayer for employment taxes, the trade name of the LLC should not be included on the NFTL.

  3. If the d/b/a or t/a name is included in the ICS "Secondary" name line field, create a new Name/Address record to include this information on the ICS "Primary Continued" name line field so it will appear on the NFTL.

5.12.7.5.2  (10-18-2013)
Partnership

  1. General partners are individually liable for partnership debts, and separate assessments against them are not essential to sustain their individual liability. The separate liability of the partners is not an issue unless the partnership neglects or fails to pay the assessed liability.

  2. Partnerships normally have one employer identification number (EIN).

    If Then
    a single partnership has multiple outlets or businesses one EIN should be assigned to that partnership.
    the same person established several partnerships each partnership should be assigned a different EIN.
    there is any doubt that a change in the name of a partnership will affect any NFTL filings request an advisory opinion from Area Counsel through appropriate channels. See IRM 5.1.11.7.14, Entity Changes, for entity change procedures. BMF must reflect the name change.

    Note:

    Although a change in name due to a change in membership of a partnership resulting from death, withdrawal, substitution or addition of a partner does not, in itself, effect a termination of a partnership for FICA or FUTA purposes, it does have an effect on the composition of the entity at law insofar as the collection of debts from the separate partners is concerned.

    Area Counsel advises that a new form should be submitted based on any changes in a partnership prepare either a Form SS-4, Application for Employer Identification Number or Form 2363, Master File Entity Change.
    adding to or changing a partnership entity list all partners adding "PTR" following the name of the last partner.

  3. A supplemental assessment is not required when adding a general partner’s name to the partnership assessment. The Service's position is that the assessment and statutory lien against the partnership is also an assessment and statutory lien against each general partner.

5.12.7.5.3  (10-18-2013)
Limited Liability Company (LLC)

  1. When filing an NFTL on a single member disregarded LLC entity, whether the name of the single member or the name of the LLC should appear on the lien notice document depends on the tax liability being collected.

    1. For collection of employment taxes incurred with respect to wages paid on or after January 1, 2009, the LLC is the taxpayer and the name on the lien notice document should be the name of the LLC. See Treasury Regulation 301.7701–2T(c)(2)(iv)(A).

    2. For collection of certain excise tax liabilities imposed on or after January 1, 2008, the LLC is the taxpayer and the name on the lien notice document should be the name of the LLC. See Treasury Regulation 301.7701-2(c)(2)(v)(A).

  2. For NFTLs filed with respect to collection of liabilities not addressed in (a) or (b) above, you must determine whether the LLC or the single member owner of the LLC is the liable taxpayer. See IRM 5.1.21, Collecting from Limited Liability Companies, for assistance in making that determination. If the single member is the taxpayer then only the name of the single member should be included on the lien notice document.

    Caution:

    Do not include the name of the disregarded entity. Such action would indicate to a potential creditor that the government has perfected a lien interest in the assets of the LLC. Including the name of the LLC would create a situation parallel to a "doing business as" or "trading as" secondary name line.

  3. If the NFTL is incorrectly filed in the name of the disregarded LLC and the single member is not listed on the lien notice document, then file a new NFTL in the name of the single member.

    1. Withdraw the previously filed NFTL listing only the name of the disregarded entity.

      Caution:

      Depending on the facts of each case, an NFTL identifying the disregarded LLC as the taxpayer may be a valid notice against the single member owner. The Government's position is that an NFTL need not precisely identify the taxpayer; rather, the NFTL is valid if it substantially complies with the filing requirement so that constructive notice is provided to third parties. The Service loses priority when withdrawing NFTLs so consult with Area Counsel where the name of the LLC is very close to the name of the taxpayer. Allow Counsel to make a determination based on the case facts.

    2. Do not release the previously filed NFTL filed in the name of the disregarded entity. This action would extinguish the underlying statutory lien which under IRC § 6322 is associated with the assessment.

    3. Filing under the correct name will not preserve the priority of the NFTL filed under the name of the disregarded LLC

  4. If the NFTL is incorrectly filed in the name of the disregarded LLC but the single member owner is also listed on the lien notice document, then correct the filed NFTL by removing the name of the disregarded LLC and referring back to the original NFTL.

    1. To correct a filed NFTL through the ALS application use the ALS AMEND program. The ALS AMEND program will supply the verbiage to connect the amended NFTL to the original NFTL.

    2. Use the Centralized Lien Operation (CLO) Form 13809, available through the Publishing web site, to request CLO amend the original NFTL.

    3. Issue a partial Withdrawal only if requested.

    4. Do not release the previously filed NFTL. The release will extinguish the underlying statutory lien which under IRC § 6322 is associated with the assessment.

  5. The EIN used in the assessment should be used for the lien notice, despite the resulting mismatch between the entity name and the EIN, to ensure systemic notifications for the lien release in the Automated Lien system.

    Note:

    Certain mistakes on the NFTL are permissible so long as the name on the NFTL is sufficient to put third parties on notice of a lien outstanding against the single member. Thus, even if the EIN used in the assessment and in the NFTL is that of a disregarded entity, the NFTL is still valid when it is filed in the name of the single member.

    Reminder:

    If the name control and TIN on ALS are not the same, the TC582 and TC583 will not post. See IRM 5.12.7.9.2 for name control mismatch instructions.

  6. The entity type for the single member will dictate where the NFTL is filed with regard to the recording official specified in a state’s version of the Uniform Federal Lien Registration Act.

    If the single member is then the NFTL filing location is the
    a corporation Secretary of State or equivalent official specified in state law.
    a partnership location provided for partnership filing in state law.
    an individual residence of the individual (for personal property).

    Note:

    To perfect the lien against real property, owned by the single member, state law generally requires filing with the jurisdiction where the property is physically located.

    another LLC location specified for the tax status elected by LLC or member status if single member LLC is also disregarded.

  7. When filing an NFTL where the LLC is the liable taxpayer:

    • select the name line that contains only the name of the LLC (and trade name, if applicable).

    • select the "Limited Liability Company" entity type when requesting NFTL through ICS.

    • select the "LLC" entity type when requesting an NFTL through ALS.

    • File it in the location specified for corporations in a state’s version of the Uniform Federal Lien Registration Act .

  8. If the liable taxpayer changes, due to changes in ownership, classification or regulations, special actions may be required:

    If the identity of the taxpayer changed... Then ...
    From one period to the next resulting in a change of the taxpayer of record Separate NFTLs must be filed for each taxpayer, selecting the appropriate tax periods for each.
    During a tax period Separate calculation of the portion of liability attributable to each taxpayer is required
    • There may be two separate NFTLs with different names but the same EIN and tax period with the appropriately allocated amounts of liability.

    • Complete Form 12636, Request for Filing or Refiling Notice of Federal Tax Lien, for each liable taxpayer and send by secure email to the appropriate team in Centralized Lien Operation (CLO).

    See IRM 5.1.21

5.12.7.5.3.1  (10-18-2013)
Creating New LLC Name Line Using ICS

  1. The NFTL must properly identify the name of the taxpayer so that the public is placed on notice. You must determine whether the LLC or the owner is the liable taxpayer.

  2. Care should be taken to ensure that the NFTL is filed properly by selecting the liable taxpayer's name and address and the correct location for filing under state law, depending on the identity of the taxpayer.

  3. When creating a new name line using ICS, take the following steps.

    Step Action
    1 To create a new name and address using only the name and address of the identified taxpayer, at the ICS Case Summary Screen, select Entity Detail
    2 Select Name/Address then 'Add'
    3 'From the 'Case Address' menu, if the LLC itself is the liable taxpayer, select the ‘LLC-LLC is Liable Address’. To create a new name for the single member, select the LLC-Owner is Liable Address’.
    4 The Domestic Address Format is preselected. Change if applicable.
    5 Add the address record. For an LLC-Owner is Liable address, input of the Secondary TIN is a required field, either an SSN or an EIN
    6 When filing an NFTL, if the LLC is the taxpayer, remember to select the ‘Proprietorship’ option on the ICS menu so that no entity type will be printed on the NFTL. If the owner is the taxpayer, select the entity type of the owner, IRM 5.1.21
    7 Click ‘Save’
    8 If all information is correct, click ‘yes’ when prompted
    9 Click ‘Exit’ to return to the Case Summary Screen

5.12.7.5.4  (10-18-2013)
Name Changes

  1. Taxpayers may change names after the NFTL has been filed. To avoid disputes over lien priority in subsequently acquired assets, correct the NFTL reflecting the name or alias.

    1. Place the new name on the first line.

    2. Place the previous name on the second name line, preceded by either ‘aka’ for ‘formerly known as’.

  2. The DIAL (Delinquent Inventory Account Listing) interface does reduce the need for amended or corrected NFTLs. However, it is important to ensure that the name on the NFTL can be identified by public records searchers. Now that ALS has an AMEND application, use that application to correct NFTLs of this nature thus protecting the priority of the original NFTL.

  3. The ALS AMEND application (see also IRM 5.12.7.9.3) will supply the verbiage to connect the amended NFTL to the original NFTL. Use CLO Form 13809, available through the Publishing web site, to request CLO amend the original NFTL.

  4. Use this procedure when the taxpayer’s name has been misspelled. See IRM 5.17.2.3.5, Effect of Errors in Notice of Federal Tax Lien for guidelines on whether the error makes the NFTL defective.

5.12.7.5.5  (10-18-2013)
Substitute for Return (SFR) Notices of Federal Tax Lien

  1. When an SFR assessment is made against an individual as Married Filing Separate (MFS), that assessment is valid against that individual from the date of the SFR assessment until it is satisfied or expires. If the individual subsequently files a return, whether retaining or changing the filing status, the assessment is still valid against that individual from the date of the SFR.

  2. Only the taxpayer and their spouse can elect to file a joint return. So a taxpayer with an MFS SFR assessment and their spouse may subsequently choose to file a Married Filing Joint (MFJ) return to replace the SFR assessment. In this situation the spouses become jointly liable. Where a spouse joins an existing SFR assessment, the joining spouse becomes liable for the tax from the date of the SFR assessment.

    Example:

    An SFR (MFS) where the MFJ replacement return lowers the module balance:
    04/14/2010 a 30-200812 MFS SFR assessment is made against John Doe.
    10/31/2010 a 30-200812 MFJ return is filed by John Doe and his joining spouse Jane Doe.
    12/15/2010 a TC 291 posts reducing the SFR (now joint) assessment.
    John Doe is liable for the adjusted assessment from the original assessment date 4/14/2010
    Jane Doe is now liable for the assessment as adjusted from the original assessment date 4/14/2010.

    Example:

    An SFR (MFS) where the MFJ replacement return increases the module balance:
    12/15/2010 same facts as above except that a TC290 posts increasing the module balance.
    John Doe remains liable for the assessment from the original assessment date 4/14/2010
    Jane Doe is now liable for the assessment originally assessed on 4/14/2010.
    John and Jane Doe are both liable for the TC 290 amount assessed 12/15/2010.

  3. The method of addressing NFTLs is as follows:

    IF AND AND THEN
    SFR is assessed against primary spouse NFTL is filed against primary spouse for the SFR assessment MFJ return is filed which reduces the liability No change should be made to NFTL on primary spouse.

    A new NFTL can be filed using the original SFR assessment date and showing both spouses (preferable method).
    A new NFTL can be filed using the joining spouse (only if filing against the primary spouse is prohibited).
    SFR is assessed against primary spouse NFTL is filed against primary spouse for the SFR assessment MFJ return is filed which increases the liability No change should be made to NFTL on primary spouse.

    A new NFTL can be filed showing both spouses and reflecting both the original SFR assessment date and the additional assessment date.
    SFR is assessed against primary spouse No NFTL is filed against primary spouse for the SFR assessment MFJ return is filed which either reduces or increases the liability A new NFTL can be filed showing both spouses and reflecting both the original SFR assessment date (and additional assessment date, if applicable).

  4. Check with Area Counsel if the entity situation does not fit with the scenarios above. For example, a situation where an SFR MFS has been assessed against one spouse and then a MFJ return is filed using the joining spouse's SSN as the primary TIN. How the NFTL is addressed would depend on how the return is processed. Was the original SFR adjusted or abated as a result of the MFJ return filed? The statutory lien and its assessment must be accurately reflected on the NFTL.

5.12.7.5.6  (10-18-2013)
Consolidated Group NFTLs

  1. A consolidated group is an affiliated group of corporations filing one consolidated tax return for the affiliated corporations. The corporations are connected through stock ownership and share a parent-subsidiary relationship with the Common Parent of the affiliated group (in these situations referred to as a Consolidated Group). The Common Parent of the Consolidated Group files a consolidated income tax return to offset profits and losses of the affiliates.

  2. Treasury Regulation 1.1502-6(a) imposes "several" liability for the consolidated tax liability of the group as a whole on the common parent and on each subsidiary which was a member of the consolidated group during any part of the consolidated return year. As a result, the IRS may collect from the common parent or from any such subsidiary for the unpaid tax liabilities of the consolidated group for the consolidated return year.

  3. ALS has limited name line space so care must be taken when filing an NFTL for a Consolidated Group. Consult with Area Counsel, if there are questions. When an NFTL needs to be filed and the subsidiaries are too numerous to fit on the name line for ALS, a manual NFTL must be utilized. The manual NFTL can attach a second page listing the names which did not fit on the face of the NFTL. See IRM 5.12.7.4 for manual NFTL preparation.

5.12.7.5.7  (10-18-2013)
Estate and Gift Tax

  1. Estate and Gift Tax Liens are discussed in IRM 5.5.8, Estate Tax Liens.

  2. To file a notice of the estate tax lien, Form 668(J) or Form 668(H) must be manually prepared

  3. Manually post estate tax lien recording fees if applicable. These fees may be different than those fees used for recording Form 668(Y)(c).

5.12.7.6  (10-18-2013)
Special Condition NFTLs (Nominee, Alter Ego, Transferee)

  1. Under certain circumstances a statutory lien continues to attach to transferred property even though an NFTL was not filed at the time of transfer. For example, the taxpayer (transferor) transfers property to a party (transferee) and does not receive adequate and full consideration in money or money's worth. The transferee is not considered a purchaser and so does not qualify for the protection of IRC § 6323. Those who are not protected by IRC § 6323 compete against the statutory lien rather than the filed notice. See IRC § 6323(h)(6) for a more complete definition of a purchaser. There are certain circumstances, even without a transfer, where the taxpayer has an interest in property owned by a third party. These circumstances include nominee and alter ego situations. A nominee is someone who holds legal title to the property while the taxpayer has a beneficial interest to which the statutory tax lien attaches. An alter ego situation is where the taxpayer and a third party are so closely aligned that legally they are regarded as having the same identity. Therefore, the taxpayer has a beneficial interest in all of the alter egos property to which the statutory lien attaches. As with the transfer discussed above, neither the nominee nor the alter ego have protection under IRC § 6323. See IRM § 5.17.14.6, Nominee and Alter Ego Doctrines.

  2. Revenue Officers may encounter situations where the taxpayer has transferred property and circumstances indicate actual or constructive fraud. Property may have been acquired in the name of another person or entity and the taxpayer controls the property to such an extent that the title holder is possessed of ‘color of title’. See IRM 5.17.2, Federal Tax Liens for nominee, alter ego, and transferee theory. Generally, no fraud is indicated if the transfer was made at a time when no tax liability had accrued or was anticipated or the taxpayer did not retain any use or control of the property. See also paragraph two in both IRM 5.12.7.6.1 the Note, and IRM 5.12.7.6.3.

  3. An NFTL for a nominee situation contains a statement on the face of the NFTL. The statement expresses the lien's attachment, through the lien notice, to the specific property identified in the statement.

  4. An NFTL in an alter ego situation will not be limited to certain identified property. Because of the broad nature of the lien asserted with alter egos, the facts of each case should be carefully considered before asserting an alter ego theory.

  5. An NFTL for a transferee situation contains a statement on the face of the NFTL. The statement expresses the lien's attachment, through the lien notice, to the specific property identified in the statement.

  6. Special NFTL condition lien notices are generally intended as a foundation for the pursuit of enforcement action such as levy, seizure, suit to foreclose a lien, or other related action. Collection and Counsel resources should be taken into consideration if the case collection action plan does not include pursuit of enforcement actions.

    Note:

    See IRM 5.12.7.6.4 for instructions on the request, approval, and filing of special condition lien notices.

  7. If an NFTL is filed in the name of the taxpayer before the transferee encumbers or sells the property to a valid purchaser, the government's lien interest is fully perfected. In these circumstances, the lien can be enforced by a seizure of the property from the transferee or subsequent valid purchaser, or by a suit to foreclose the lien. A special condition NFTL would not be required in this situation.

  8. A special condition lien notice may not be filed without the written approval of Area Counsel.

5.12.7.6.1  (10-18-2013)
Nominee Lien Notices

  1. A nominee is someone designated to act for another. In the context of the federal tax lien, a nominee is generally a third person who holds legal title to property of a taxpayer while the taxpayer enjoys full use and benefit of that property. The statutory lien attaches to all property and rights to property owned by the taxpayer even if a third person holds legal title. The third person can be any person listed in IRC § 7701 (a) (1).

  2. A nominee situation normally involves a fraudulent conveyance or transfer of a taxpayer’s property to avoid legal obligations. To establish attachment of the statutory lien in a nominee situation, it must be shown that while a third party may have legal title to the property, it is the taxpayer that owns the property and who enjoys the full use and benefit.

    Note:

    If there are fraud indicators associated with a property transfer prior to the assessment (i.e. statutory lien arising) and little evidence that the taxpayer controls or enjoys full use and benefit of the property, contact Area Counsel as soon as practicable to discuss making a suit referral to the Department of Justice.

  3. Consider the following circumstances when developing your case:

    1. the taxpayer is paying maintenance expenses,

    2. the taxpayer is using the property as collateral for loans,

    3. the taxpayer is paying state and local taxes on the property,

    4. the taxpayer has the use or benefit from the property, or

    5. other relevant facts. See also IRM 5.17.2.5.7.2.

  4. The taxpayer may record fraudulent transfer documents that make it appear as if the transfer of the property was to a valid purchaser prior to the filing of the NFTL. For example, the taxpayer may record a warranty deed showing the alleged purchaser paid fair market value for the property instead of a quit-claim deed for love and affection. Examples of nominee situations include:

    Example:

    Minnie College owes $70,000 for tax periods 200812 and 200912 assessed in April 2012. Minnie deeds property valued at $250,000 to her daughter, Molly for no cost in January 2011. Minnie continues to maintain the property and uses it as collateral for obtaining a car in January 2012. Even though Molly lives on the property, Molly is a nominee of Minnie because consideration was not paid for the property.


    Example:

    Sam Smith is the beneficiary of an Illinois Land Trust, the corpus of which consists of land located in the state of Illinois. ABC Trust Co is designated as the trustee of the trust. Although under Illinois law the trustee is the legal owner of the land, Sam retains full use and benefit of the land, including control over disposition. Therefore ABC Trust Co is Sam’s nominee with respect to the land held in the trust. A nominee lien should be filed in the county office where the land is located in the name of “ABC Trust Co, nominee of Sam Smith”.

  5. A nominee lien notice may not be filed without the written approval of Area Counsel.

5.12.7.6.2  (10-18-2013)
Alter-Ego Lien Notices

  1. The "‘alter-ego’" (second self) doctrine has been summarized as follows: The obligation of a corporation will be recognized as those of another person, and vice versa, where it appears that the corporation is not only influenced and governed by that person, but there is such a unity of interest and ownership that the individuality or separateness, of the person and the corporation has ceased. Also the facts are such that adherence to the fiction of the separate existence of the corporation would, under the particular circumstances, sanction a fraud or promote an injustice. The alter ego question does not concern property rights and should not focus on whether the taxpayer had a state-law enforceable property right in property. Rather, a proper alter ego analysis focuses on which entities are liable for the debt and whether two entities that are formally separate should be regarded as one.

    Note:

    It is generally more difficult to establish alter-ego relationships than a nominee situation.

  2. There are two elements to the alter ego doctrine:

    1. Unity of ownership and interest, and

    2. Fraud or inequity would result from the failure to disregard the corporate entity.

  3. Some factors pertinent to a determination to disregard the corporate entity are whether the individual:

    1. is in a position of control or authority over the entity;

    2. controls the entity to shield himself from personal liability;

    3. uses the business entity for his or her own financial benefit;

    4. uses the business entity to assume personal debts, or debts of another, or

    5. uses personal funds to pay the business entity’s debts.

  4. Some facts establishing the factors in (3) above are:

    1. commingling of funds and other assets,

    2. failure to segregate funds of the separate entities,

    3. an unauthorized diversion of corporate funds or assets to other than corporate uses,

    4. treatment by an individual of the assets of the corporation as his own,

    5. failure to obtain authority to issue stock or to subscribe to or issue the same,

    6. holding out by an individual that he or she is personally liable for the debts of the corporation,

    7. failure to maintain minutes or adequate corporate records, and the confusion of records of separate entities,

    8. the identical equitable ownership in two entities,

    9. the failure to adequately capitalize a corporation, the total absence of corporate assets, and under capitalization,

  5. Explore the possibility of using the administrative process of jeopardy, transferee assessment, nominee lien notice, emergency lien foreclosure action, or emergency transferee or fraudulent conveyance suit before filing an NFTL in the name of an alter-ego.

  6. Do not file an NFTL in the name of an alter-ego without legal review, advice, and written direction from Area Counsel as to:

    1. the need for a supplemental assessment,

    2. a new notice and demand, and

    3. the language to be incorporated in the NFTL.

  7. Refer to the Legal Reference Guide for Revenue Officers, IRM 5.17.2, for additional information.

5.12.7.6.3  (10-18-2013)
Transferee Lien Notices

  1. The term transferee can be a confusing concept because the term is used in different ways. In the context of this IRM section, transferee refers specifically when a statutory lien attaches to property and the property has been transferred by the taxpayer though a gift, bequest, devise, or inheritance before an NFTL could be filed. There is no requirement that the taxpayer retain use of or a beneficial interest in the property. With the approval of Area Counsel, a special condition lien notice naming the transferee and the property transferred may be filed.

    Example:

    William and Mary have outstanding tax liabilities but state they have no property and so cannot pay their liability. They gave their $600,000 home to their son Bob after the liabilities and statutory lien arose but before an NFTL was filed. After which, they moved into leased property. The deed to the home is in Bob's name, he lives in the home, maintains it, and has used the home as collateral to finance his mortgage. Bob is a transferee because the statutory lien existed before the transfer and he did not pay for the property.

  2. Contact Area Counsel as soon as practicable to discuss making a suit referral to the Department of Justice if there are fraud indicators associated with a property transfer prior to the assessment (i.e. statutory lien arising) and little evidence that the taxpayer controls or enjoys full use and benefit of the property.

  3. Other uses for transferee include:

    1. An administrative transferee assessment under IRC § 6901. An IRC § 6901 assessment carries its own statutory federal tax lien. Normal NFTL filing procedures and appeal rights are followed.

    2. A transferee judgment lien obtained through a suit to establish a transferee liability or set aside a fraudulent transfer. This transferee judgment lien is not the same as a statutory federal tax lien and can't be used as the basis to file a special condition transferee lien notice.

  4. For more information about transferee situations, see the following references:

    • IRM 5.17.14, the Legal Reference Guide for Revenue Officers - Fraudulent Conveyances and Transferee Liability,

    • IRM 5.1.14.2, Field Collection Techniques and Other Assignments for information on Transferee liabilities assessed under IRC § 6901, and the

    • IRM 25.3, Litigation and Judgments series when pursuing a suit recommendations regarding fraudulent transfers.

5.12.7.6.4  (10-18-2013)
Special Condition NFTL Approval Process: Request, Advisory Review, and Post-Approval

  1. The request and approval of special condition NFTL involves a request from a revenue officer, approval by their manager, review by Advisory, and approval by Area Counsel.

  2. Given the geographic diversity of the workforce, all review and approval work will be conducted, whenever possible, through electronic transmissions (generally via secure email).

  3. The Revenue Officer's pre-approval request actions are the first step.

    Note:

    See also IRM 5.12.7.6.4.1,Taxpayer NFTL Filing When Special Condition NFTL Filed.

  4. The revenue officer's manager is the second step in the approval process. If the special condition lien notice is a protective action only, consideration must be given to economic factors, and the resources of Field Collection and Area Counsel. Consideration of these factors will be reflected in the request package.

  5. The third step is the review process in Advisory. See IRM 5.12.7.6.4.4, Advisory Review Actions.

  6. The final step is the responsibility of Area Counsel. They must approve all special condition NFTL and any associated enforcement action, court action, or protective action recommended by the originating revenue officer.

  7. If Area Counsel approves a special condition lien notice and associated enforcement action, generally they return the request package to Advisory (IRM 5.12.7.6.4.4, Advisory Review Actions) with any document perfections needed. There may be occasions because of time and/or inventory considerations where the revenue officer perfects the approved special condition NFTL. In either situation, perfecting the draft NFTL involves following Area Counsel's directions as to the name line, property description, and any other special identifying language.

  8. Generally where a suit is anticipated and even though they have reviewed the draft suit package along with the special condition NFTL request, Area Counsel will need to have the suit package re-presented to them once the special condition lien notice has been filed.

5.12.7.6.4.1  (10-18-2013)
Taxpayer NFTL Filing When Special Condition NFTL Filed

  1. As part of the special condition NFTL request process, ensure that a regular NFTL, naming the taxpayer and covering the same statutory liens (assessments), is filed in real and personal property where the taxpayer resides before or at the time of the special condition NFTL filing.

  2. Additionally, ensure that a regular NFTL is filed in the same location(s) as the special condition NFTL either before, or at the time of, filing the special condition NFTL. These actions will protect the government's interest in the event of bankruptcy or litigation.

5.12.7.6.4.2  (10-18-2013)
Revenue Officer Request Actions

  1. Revenue officer actions for a special condition NFTL request pre-approval include:

    1. Identify, as part of case review and analysis, when the elements exist to pursue a special condition NFTL. See IRM 5.12.7.6.1, IRM 5.12.7.6.2, IRM 5.12.7.6.3, and IRM 5.17.2.5.7;

    2. See IRM 5.12.7.6.4.1, Taxpayer NFTL Filing When Special Condition NFTL Filed;

    3. Seek pre-submission advice on the merits of the case from Advisory or Area Counsel to ensure that the elements needed to substantiate the request have been established; and

    4. Prepare the request.

  2. The revenue officer prepares a memorandum request for a special condition NFTL outlining the elements of the case.

  3. A draft special condition lien notice is prepared and included along with the request memorandum for approval. Counsel has advised that generally the request memorandum should specify the alternative proposed (nominee, alter ego, or transferee) and should not propose all three as alternatives. The draft special condition NFTL should reflect the proposed alternative in the draft name line. If Area Counsel approves the filing of the special condition NFTL, the draft NFTL will be rechecked and perfected based on the language provided by Area Counsel before it is filed. When preparing the draft NFTL, use the ICS instructions in IRM 5.12.7.6.4.3 below.

  4. Do not use ALS to create a special condition nominee or transferee NFTL because both require that a description of the property attached by the lien be included in the body of the NFTL. ALS does not have the capability to add text to the body of an NFTL. It allows, in addition to the entity information, only the standard information, i.e., MFT, tax period, TIN, etc. When a property description is needed, the NFTL must be manually prepared.

  5. The request memorandum should:

    1. Develop and substantiate the basis for a special condition NFTL.

    2. Be able to withstand a court challenge (with minimal additional development).

    3. If this is a transferee situation, focus of the request should be for advice as to the need for a supplemental assessment and a new notice and demand. See IRM 5.1.14, Field Collection Techniques and Other Assignments for IRC § 6901 requests.

    4. Seek advice as to the name line to be used and any special language to be incorporated into the body of the NFTL.

    5. Include enforcement plans, since special condition lien notices are generally intended for enforcement.

      (i) If the plans are for levy or seizure, include the basis for those actions so that Area Counsel's approval can contain the approval for those actions as well. The actual forms will not be prepared until approval has been received.

      (ii) If a suit to foreclose the lien is planned, outline that plan, as the suit's package will likely need the approval of this action prior to the suit's package preparation.

      (iii) If the special condition lien notice is protective in nature, provide all relevant information to provide Area Counsel the background needed to determine whether a protective special condition lien notice is appropriate.

  6. The request will be forwarded to the group manager for approval of the decision.

  7. The manager approved request will be forwarded to Advisory for review.

  8. Wherever possible, transmission of the request should occur electronically via secure email.

5.12.7.6.4.3  (10-18-2013)
Preparing the Draft Special Condition NFTL

  1. ICS steps to use in preparation of the draft special condition NFTL:

    Step Action
    1 From the Case Summary screen, click "Entity Detail"
    2 At "Entity Detail" , from the drop down menu, select "Name and Address"
    3 Click "Add" to create a name/address entry for a special condition NFTL
    4 Click "Case Address - Other Address"
    5 Enter the name and special condition as provided by Area Counsel (e.g. "Jane Doe as nominee of John Doe" )
    6 Enter the address, click "save" and click "exit" to exit this process
    7 Next, in ICS from "within case" , select ICS Form 668Y Template
    8 Click "Next" . A pop-up fill-in dialogue box appears
    9 Skip the" Enter the Serial Number" field as no SLID should be placed on the draft document at this time
    10 Complete the entity section of the NFTL by entering:
    1. name of the special condition entity

    2. the name line phrase anticipated (e.g. Jane Doe as nominee of John Doe)

      Note:

      These two name line items will be perfected later by Area Counsel if the request is approved.

    3. the name of the taxpayer

    11 Enter the taxpayer's address
    12 Enter the tax period information
    13 For an asset specific notice, use the designated template field.
    1. If the description is brief, enter:
      "This special condition lien notice attaches to only the specified property described below"
      [insert property description]

      Example:

      Example: Seascape Yacht, VIN 65T23465, Location: Blackrock Court, Seaside, FL 94899.

    2. If the property description is lengthy, enter
      "This special condition lien notice attaches to only the specified property described in the attached exhibit."
      [attach a separate document with the property description]

    14 Enter the filing location
    15 Enter your t-sign number
    16 Select "no" when asked if you want to add Form 3982
    17 Click "save"
    18 From the Print Manager, Click "Switch to Word" and review the document for accuracy.

    Note:

    the typed property description may cause the bottom sections of the NFTL document to roll over to another page. To fix this, simply place your cursor over the empty rows, click "Table" on the Word Menu Bar (at the top), scroll down to the "Delete" command and over to "Rows" and click. This will delete the unused rows and roll up the unused sections from the other page back to the NFTL. Make sure to execute this fix on both pages of the NFTL.

    Reminder:

    If the ICS template is unavailable, prepare the NFTL using the PDF fillable version from the Publishing catalog.

5.12.7.6.4.4  (10-18-2013)
Advisory Review Actions

  1. Advisory generally becomes involved with a special condition NFTL request prior to submission of the request package. Advisors provide advice to revenue officers on the merits of the case and the substantiation needed for approval. The advisor will seek the assistance of Area Counsel, as needed, at this stage.

  2. When receiving a special condition NFTL request package, Advisory opens an ICS NFOI 191 control.

  3. Advisory is then responsible to review and perfect the request package for approval consideration. They are to ensure all the elements needed for the request have been provided and that the revenue officer has included adequate substantiation to prove their position.

    Note:

    See also IRM 5.12.7.6.4.1, Taxpayer NFTL Filing When Special Condition NFTL Filed

  4. Once the request is ready, Advisory will forward the request to Area Counsel for approval. Wherever possible, transmission of the request should take place electronically.

  5. Once the special condition lien notice and any associated enforcement actions have been approved, Advisory perfects the name line, special conditions, and, for any notices of nominee or transferee lien the property description, based on Area Counsel's instructions.

  6. Advisory then notifies the originating revenue officer of the approval and forwards the special condition NFTL and any attachments (generally via secure email) to CLO FORT (Field Office Resource Team) for processing at *SBSE CCP FORT. See IRM 5.19.12, Centralized Case Processing - Liens for CCP procedures.

    Reminder:

    See also IRM 5.12.7.6.4.1, Taxpayer NFTL Filing When Special Condition NFTL Filed.

  7. As ALS does not issue any CDP notice letters or special condition NFTL letters when a special condition NFTL is filed, both the FORT and Advisory must ensure that the originating revenue officer has the information needed to send the appropriate CDP notice letter(s) and/or other letters timely as part of the filing process.

  8. Advisory will receive from the FORT, via secure email, a copy of the special condition NFTL, including the SLID assigned by ALS, sent to the recording office for filing. Again, Advisory must ensure that the FORT sends this to Advisory as soon as the special condition NFTL is printed and sent for filing.

    Note:

    If a SLID must be obtained by Advisory or the revenue officer, see IRM 5.12.7.6.4.7 for methods of obtaining the serial lien identification number (SLID) when manually creating an NFTL.

  9. Advisory provides the originating revenue officer (generally via secure email) a copy of the special condition NFTL with a reminder to the revenue officer to monitor ALS for the posting of the recording information and to follow-up on the letters to be sent to the special condition entity, taxpayer, and any applicable Powers of Attorney.

  10. Advisory closes their ICS control.

  11. The FORT should be providing a copy (electronically scanned and secure emailed) of the filed special condition NFTL and any associated taxpayer NFTL with the recording information to both the originating revenue officer and Advisory. Advisory will associate this with their closed case file. The FORT will also retain an electronic copy of the filed special condition NFTL and any associated taxpayer NFTL for future reference.

  12. Subsequent levy or seizure enforcement action is at the Area Office’s discretion once Area Counsel has approved the special condition theory in writing. Generally suit packages are re-presented to Advisory and Area Counsel once the special condition lien notice is in place.

5.12.7.6.4.5  (10-18-2013)
Special Condition NFTL SLID Numbers

  1. Normally the special condition NFTL SLID number will be generated by ALS when CLO inputs the information from the approved special condition NFTL after receiving it from Advisory. However, there may be situations when either the originating revenue officer or Advisory will need to generate the SLID.

  2. One way to request a SLID is to use Form 12636 to request it from CLO by fax or secure email to the group for the appropriate state.

  3. A second way to generate a SLID is through ICS. Through coordination with ALS, ICS can generate a SLID starting with the number 27. From the ICS Collection Activity Screen:

    • Select "Federal Tax Lien"

    • Request "Lien"

    • Verify the address information

    • From "Lien type"

    • Select "File Manually"

    • Type the SLID obtained from the ICS process into the ICS Form 668(Y)(c) template. Secure email the NFTL and any attachments to CLO and they will complete the billing and issuance process.

  4. A third way that Advisory can generate a SLID is through ALS, if they have permissions, by entering all applicable entity and tax information, and then:

    • Selecting the entity type as nominee to suppress the printing of the regular CDP notice. This selection automatically populates the first line of the lien notice with "Nominee of"

    • Suppressing the printing of the lien notice by answering (N)o to the question "Print and Store" before inputting the revenue officer's assignment number.

    • Answering the question "On Voucher" , for NFTL manually prepared and hand carried for filing, as "N" .

      Exception:

      For filing with Boston United States District Court and for the Connecticut Secretary of State answer the "On Voucher" question "Y" .

  5. However the SLID is generated, the revenue officer must ensure that CLO has a copy of the manually filed NFTL.

5.12.7.6.4.6  (10-18-2013)
Post Approval Revenue Officer Actions

  1. After receiving from Advisory a copy of the approved special condition lien notice and confirmation that the special condition NFTL has been sent for filing, the revenue officer must within five (5) days manually prepare and mail the appropriate letters informing the special condition entity and the taxpayer of the special condition NFTL filing and providing the taxpayer, if appropriate, the taxpayer's CDP notice. See IRM 5.12.7.4 Manual NFTL Preparation and IRM 5.12.7.6.5 Appeal Rights for Special Condition NFTLs for those instructions.

    Reminder:

    See also IRM 5.12.7.6.4.1, Taxpayer NFTL Filing When Special Condition NFTL Filed.

  2. When the special condition NFTL is processed through CLO and the FORT, the recording office will return the recording information to CLO. The revenue officer must follow-up to ensure the NFTL was properly filed and the court recording data entered into ALS. The FORT should be providing a copy (electronically scanned and secure emailed) of the filed NFTL with the recording information to both the originating revenue officer and Advisory.

  3. The revenue officer associates this special condition NFTL document, a copy of the approval memorandum from Area Counsel, and any other relevant documents with their case file.

  4. The revenue officer proceeds with their intended case actions. See IRM 5.12.7.6.6.

5.12.7.6.4.7  (10-18-2013)
Post Approval Exigent Circumstance Actions

  1. Most special condition lien notices are processed routinely through the CLO FORT. Occasionally there are exigent circumstances such as an imminent property transfer or other jeopardy situation. In these situations the special condition lien notice is hand carried to the recording office for filing.

    Reminder:

    See also IRM 5.12.7.6.4.1, Taxpayer NFTL Filing When Special Condition NFTL Filed.

  2. Either Advisory or the revenue officer will contact the CLO FORT by phone and follow-up with an electronic or faxed expedite Form 12636 request for a SLID number "only" . The exigent circumstances will be explained and an electronic copy via secure email of the approved special condition NFTL will be provided to the FORT. This way the FORT will know to select an entity type in ALS for the special condition, suppress printing the NFTL for filing, and take this NFTL off the normal voucher system for filing fees.

  3. The FORT creates a special condition NFTL in ALS to mirror the special condition NFTL based on ALS limitations and provides the SLID to the requestor. See IRM 5.12.7.6.4.5 for those instructions.

  4. The revenue officer then physically carries the special condition lien to the recording office for filing.

  5. See IRM 5.12.7.6.4.8 for instructions on paying filing fees.

  6. The revenue officer must within four (4) days of physically filing the special condition NFTL, forward electronically via secure email a copy of the filed NFTL with recording information to both the FORT and Advisory.

    Reminder:

    If the recording data is not input to ALS, timely release may not occur.

  7. The revenue officer must within five (5) days manually prepare and mail the appropriate letters informing the special condition entity and the taxpayer of the special condition NFTL filing and providing the taxpayer, if appropriate, the taxpayer's CDP notice. See IRM 5.12.7.4, Manual NFTL Preparation and IRM 5.12.7.6.5 Appeal Rights for Special Condition NFTLs for those instructions.

  8. The revenue officer associates this special condition NFTL document, a copy of the approval memorandum from Area Counsel, and any other relevant documents with their case file.

  9. The revenue officer proceeds with their intended case actions. See IRM 5.12.7.6.6.

5.12.7.6.4.8  (10-18-2013)
Filing Fee Payment for Special Documents

  1. Hand-Carried Documents for filing:

    1. Revenue officers preparing special documents hand carried to recording offices may be required to pay the recording fee.

    2. If recording fees are paid out-of pocket, use the IRS' travel program for reimbursement.

    3. Recording offices in some jurisdictions may accept the submission of Form 3982, Billing Support for Lien and Certificate Fees, for fee payment (IRM 5.12.7.12.3).

    4. Fees may be more than the cost of a regular lien notice filing because of attachments. You should contact the recording office prior to hand carrying documents for filing to ensure the amount needed to file is available.

  2. CLO Processed Documents for filing:

    1. Revenue officers may also forward manually prepared documents via secure email or regular mail to CLO for processing and fee payment. These documents will be issued (mailed) with the next Tuesday or Thursday lien notice document issuance to recording offices, after receipt.

      Example:

      RO Smith forwards a manually prepared nominee lien notice, containing a property description in the body of the NFTL, to CLO via secure email Wednesday morning. The document is retrieved by CLO Wednesday afternoon. The normal document print cycle is Thursday. RO Smith's nominee lien notice will be batched and mailed with documents scheduled for the Thursday print cycle.

  3. See also IRM 5.12.7.6.4.1.

5.12.7.6.5  (10-18-2013)
Appeal Rights for Special Condition NFTLs

  1. Persons assessed as transferees under IRC § 6901 have an assessment and statutory lien separate from the transferor/taxpayer entitling them to due process appeal rights. Ensure they are issued a Letter 3172, Notice of Federal Tax Lien Filing and your Rights to a Hearing Under IRC 6320.

  2. Persons determined to be nominees, alter-egos, or transferees not assessed under IRC § 6901 are entitled to a post-filing appeal under the Collection Appeals Program (CAP).

    Manually issue Letter 3177, Letter Notifying of Federal Tax Lien Filing-Nominee or Alter-Ego, and related publications after the lien notice has been filed.

    Note:

    Persons determined to be nominees, alter-egos, or transferees not assessed under IRC § 6901 do not meet the definition of eligibility for CDP rights. That definition is outlined in IRC §6320 and identifies the party to receive notice as the taxpayer against whose property the statutory lien has arisen. A statutory lien attaches to all of a taxpayer's property whether or not it is held by a third party. See also Treasury Regulation § 301.6320-1 Question and Answer numbers A7 and B5, IRM 5.12.6, and IRM 5.17.2.

  3. The taxpayer is entitled to a collection due process hearing only the first time that the statutory lien appears on a lien notice and to a CAP appeal for the filing of an additional NFTL or a special condition NFTL.

    Note:

    See IRM 5.12.7.6.4.1,Taxpayer NFTL Filing When Special Condition NFTL Filed.



    The taxpayer letters to be issued are:

    Letter Issued when Issued How
    Letter 3172, Notice of Federal Tax Lien Filing and your Rights to a Hearing Under IRC 6320 first time filing

    Note:

    Ensure that the regular NFTL, when it is the first time, is filed before or at the same time as the special condition NFTL

    Systemically: NFTL is issued through ALS

    Manually: exigent circumstances or NFTL created manually
    Letter 3171, Notice of Additional Federal Tax Lien Filing additional filing Systemically: NFTL is issued through ALS

    Manually: exigent circumstances or NFTL created manually
    Letter 3886, Notice to Taxpayer of Nominee/Alter Ego Federal Tax Lien Filing for every special condition NFTL issued Always issued manually


    Reminder:

    For exigent circumstances or manually created NFTL see also IRM 5.12.7.6.4.7 and IRM 5.12.7.4.

  4. Additional IRM references include: IRM 5.12.6 and IRM 5.17.2.4.

5.12.7.6.6  (10-18-2013)
Enforcement of Special Condition NFTL

  1. In determining what additional enforcement action should be taken (other than filing the NFTL), consideration must be given to the confusion in the chain of title and redemption rights of the taxpayer. These conditions may depress the marketability of any property.

  2. A judicial lien foreclosure or seizure followed by suit to foreclose the NFTL will generally bring a greater sale price particularly for real property.

  3. The administrative seizure and sale process may be used if prompt action is needed to protect the government's interest. Include any concerns and relevant facts in the request for opinion from Area Counsel.

5.12.7.6.7  (10-18-2013)
Retention, Release, and Withdrawal of Special Condition NFTL

  1. Special condition NFTL documents and case files are unique in nature and have a need to be kept longer than the normal retention period. This allows for subsequent inquiries, collection actions, and eventual lien releases to be resolved timely.

  2. Advisory will maintain the special condition NFTL, the Area Counsel authorization memorandum, and associated case histories for one year after the underlying tax liability has been satisfied or one year after the statutory period for collection has expired. See item 43 of Document 129900, Records and Information Management Record Control Schedules. Maintenance of the file may include transferring it to the appropriate Records Control Center as long as precautions are in place to ensure that the Special Condition NFTL may be timely released. Generally there will be other cases related to the special condition NFTL file such as a seizure file or suit to foreclose the lien. It may be appropriate to associate the special condition NFTL file with these other Advisory files.

  3. The revenue officer file would be disposed of following normal procedures.

  4. Releases of special condition NFTL are generally processed in the same manner as regular NFTL. The releases are systemically generated through ALS after ALS is notified by Master File of a satisfied module or ALS notes that the collection period has expired. But the release generated by ALS will have a different appearance from the manually prepared and filed special condition NFTL because ALS has certain limitations associated with name line and property descriptions. A recording office may choose to reject the document as too different from the original filing. If the recording office rejects an ALS generated release:

    1. CLO and the FORT will utilize their retained copy of the manually created special condition NFTL to prepare and file a manual release.

    2. The FORT may need to contact Advisory or the revenue officer for their retained copy in order to prepare a manual release.

  5. A request for withdrawal of a special condition lien notice may be considered where all actions related to all the property associated with the special condition lien notice have been concluded but the underlying statutory lien is still open because the taxpayer's liability has not been satisfied. See IRM 5.12.9Notice of Lien Withdrawal.

5.12.7.7  (10-18-2013)
Other Distinctive Filing Considerations

  1. In addition to special consideration lien notices, there are other filing situations which are unusual and care must be taken to ensure that the documents filed are correct.

5.12.7.7.1  (10-18-2013)
Jeopardy and Prompt Assessments NFTL

  1. Sometimes it is necessary to file a lien notice less then 10 days after an assessment is made or before an assessment has posted to IDRS. NFTLs calling for this type of action may be the result of one of the special conditions discussed above. Even if that is not the case, these NFTL require special attention in their creation, filing, and follow-up.

  2. It is important that the information on the filed NFTL, on ALS, on ICS, and on IDRS is reflected correctly and consistently. These systems operate on different processing schedules which impacts when and how NFTL filing information posts to IDRS.

  3. Creation of an NFTL with an assessment date less than 10 days old is a multi part process.

    1. When there is no master file account, hold the lien notice until the account is established.

    2. Revenue officers must request the SLID from the CCP FORT because ALS will reject an ICS SLID that is less than 10 days from the assessment date. See IRM 5.1.4, Jeopardy, Termination, Quick and Prompt Assessments for more information on jeopardy situations.

      Note:

      ALS contains an override of the "assessment less than 10 day" system block. ALS queries the creator, "Is this a jeopardy assessment? (y/n)" . If the answer is "yes" , ALS allows continuation of NFTL creation.

    3. If the NFTL will not be hand carried, allow the NFTL to be processed through the CLO normal printing and filing process.

    4. If the NFTL is being hand carried, request "printing" of the NFTL be suppressed in ALS. This will prevent a duplicate of the manual NFTL being generated for filing. The RO then uses the ALS jeopardy SLID when creating the manual NFTL in the ICS lien notice template. The NFTL can then be hand carried to the recording office as soon as the SLID is received. The revenue officer hand carrying the NFTL will have to pay the filing fee (IRM 5.12.7.6.4.8) and obtain the recording data.

      Reminder:

      The stored NFTL in ALS and the manual NFTL created in the ICS lien notice template need to match so that a later issued release by ALS will be accepted by the recording office.

    5. If the lien notice must be filed expeditiously and the filing location is other than where the originating revenue officer works, initiate an Other Investigation (OI) with the manager's approval. Utilize scanning and electronic transmission via secure email where possible. Note on the front of the OI that this is a jeopardy situation and that immediate filing of the NFTL is required. The group receiving the OI will hand carry the NFTL for filing with the recording office, pay the filing fee, and obtain the recording information. The acknowledgement copy of the 3210 with a copy of the filed document will immediately be returned to the originating office.

  4. Non-ICS users needing to file an NFTL where the assessment date is less than 10 days old, must work directly with CLO to create the NFTL.

  5. The TC 582 lien indicator and TC 360 filing fee must be manually input to IDRS after the assessment posts. This is the primary responsibility of the lien notice initiator. The NFTL initiator is to ensure that the TC 582 posts so that in the future when the NFTL needs to be released, ALS will be informed of the module closure.

  6. Inadvertent lien releases are a risk with these NFTL because it takes time for the various systems to align their information with one another. The NFTL originator must monitor the status of the module frequently and work with CLO to physically pull any inadvertent releases before they can be mailed to the recording office. Monitor until the jeopardy or prompt assessment is in collection status.

  7. Continue to monitor master file until the TC 360 (filing fee) posts and is the correct amount.

5.12.7.7.2  (10-18-2013)
Preparing NFTLs Filed After Original CSED (NAOC)

  1. Notices filed after the original "collection statute expiration date" (CSED) passed but the statute remained open were referred to as "Portland" notices. They are now called an "NFTL After Original CSED" or NAOC. The original 10 year collection statute has passed yet the statute remains open because the CSED was extended or suspended.

    Example:

    A tax liability was assessed 10/20/2001. The taxpayer filed bankruptcy which suspended the statute and a new CSED calculation posted to IDRS of 12/20/2014. The NFTL was filed in December 2011. Since the filing occurred after the original 10 year statute would have expired, the system will prompt for a date and if nothing is entered places N/A or blank in column (e), the refile by date field.

  2. When inputting these lien notices to ALS, the system will ask for the new CSED. Enter the current CSED date or, if the CSED is suspended, show all asterisks or a date that is at least 20 years after the assessment date.

    Note:

    When completing a Form 12636 request, it is essential to show the updated CSED for each period to be refiled. The updated CSED will be input to ALS . If the CSED is in suspense, the CSED field of Form 12636 should show all asterisks (**/**/****) or a future date (e.g., original CSED plus 20 years). The CSED will update on ALS once the suspense status is resolved. Do not put N/A in the CSED field of Form 12636.

  3. Whether there is a correct date, an incorrect date, no date, or an "N/A" in the refile by date field (column (e)), the rules for refiling do not change. The lien notice must be refiled timely according to IRC § 6323(g) in order for the lien's "notice" to remain valid against third parties and more importantly, that the statutory lien is not inadvertently released because of incorrect information in column "e" .

  4. Refile deadlines can be calculated using the formula below:

    1. Calculate the original refile deadline according to IRC § 6323(g)(3)(A), [e.g., 10/20/2001 + 10 years 30 days = 11/19/2011]

    2. For a second refile period deadline, calculate the refile period according to IRC § 6323(g)(3)(B), [the one year period ending 10 years after the first refile deadline, [e.g., 11/19/2011 + 10 years = 11/19/2021]

    3. For a third refile period deadline, calculate the refile period according to IRC § 6323(g)(3)(B)), [the one year period ending 20 years after the first refile deadline, [e.g., 11/19/2011 + 20 years = 11/19/2031].

    4. Enter the date calculated using the above methodology in column (e) of the NFTL.

      Note:

      The refile period calculations for old assessments may vary due to prior law. Contact Advisory and Counsel if a tax assessment CSED or lien notice refile period ended prior to November 5, 1990. See IRM 5.12.2.20.2.1 for additional information.

    5. See also IRM 5.12.8.

  5. When the module is satisfied, which for this example would be 12/20/2014, ALS will know to systemically issue a release.


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