Federal Tax Lien recorded AFTER liability has been paid in full


S

Steve_Kassel_EA

I have a very interesting case in San Mateo County, CA. IRS
requested a lien filing a few weeks ago. Apparently, San
Mateo County is taking 45 days to actually record those
liens. This has been confirmed by the Revenue Officer and by
the Taxpayer Advocate in Oakland. Couple of weeks ago, the
taxpayer sold their home and voluntarily paid off the
liability in full (the lien had not been recorded when the
home closed so it wasn't paid off through the escrow).

Ironically enough, on this same taxpayer, we have a
Collection Due Process hearing and an Application for
Taxpayer Assistance Order in process for an ENTIRELY
DIFFERENT REASON having to do with a written promise that
the IRS would not file the lien. The Taxpayer Advocate wants
SB/SE to withdrawal the lien, but they are refusing to do
so. We may get a TAO issued to withdraw the lien.

Now, back to the primary purpose of this post. We strongly
believe that if the San Mateo County Recorder records this
lien, we have a very strong case against the IRS for an
illegal lien filing. We believe the IRS MUST find a way to
physically pull the lien so that it is not recorded. A
release isn't acceptable. It must not be recorded at all.

Since the sole purpose of a lien is to protect the
government's interest and there is NO liability remaining
and thus no interest to protect, it would be a very serious
violation of the taxpayer's rights to record this lien. It
is not the fault of the taxpayer that it is taking a very
long time to actually record the lien.

I also happen to know the County Recorder personally and we
will be showing him documents to prove that no liability
exists. Hopefully, I can convince him that knowingly
recording what amounts to a false lien could expose the
county to legal action as well.

Comments?
 
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S

Stuart Bronstein

Steve_Kassel_EA said:
Ironically enough, on this same taxpayer, we have a
Collection Due Process hearing and an Application for
Taxpayer Assistance Order in process for an ENTIRELY
DIFFERENT REASON having to do with a written promise that
the IRS would not file the lien. The Taxpayer Advocate wants
SB/SE to withdrawal the lien, but they are refusing to do
so. We may get a TAO issued to withdraw the lien.

Now, back to the primary purpose of this post. We strongly
believe that if the San Mateo County Recorder records this
lien, we have a very strong case against the IRS for an
illegal lien filing. We believe the IRS MUST find a way to
physically pull the lien so that it is not recorded. A
release isn't acceptable. It must not be recorded at all.

Since the sole purpose of a lien is to protect the
government's interest and there is NO liability remaining
and thus no interest to protect, it would be a very serious
violation of the taxpayer's rights to record this lien. It
is not the fault of the taxpayer that it is taking a very
long time to actually record the lien.
If the IRS insists on recording the lien, the only thing I
can think of to be sure it's not recorded is to go to court
and ask for an injunction. It's possible that you could do
that in state court, but I'm not sure off the top of my
head. You might have to go to federal court.

I`'m not far from San Mateo - let me know if you have any other
questions I might be able to help with.

Good luck.

Stu
 
D

D. Stussy

Steve_Kassel_EA said:
I have a very interesting case in San Mateo County, CA. IRS
requested a lien filing a few weeks ago. Apparently, San
Mateo County is taking 45 days to actually record those
liens. This has been confirmed by the Revenue Officer and by
the Taxpayer Advocate in Oakland. Couple of weeks ago, the
taxpayer sold their home and voluntarily paid off the
liability in full (the lien had not been recorded when the
home closed so it wasn't paid off through the escrow).

Ironically enough, on this same taxpayer, we have a
Collection Due Process hearing and an Application for
Taxpayer Assistance Order in process for an ENTIRELY
DIFFERENT REASON having to do with a written promise that
the IRS would not file the lien. The Taxpayer Advocate wants
SB/SE to withdrawal the lien, but they are refusing to do
so. We may get a TAO issued to withdraw the lien.

Now, back to the primary purpose of this post. We strongly
believe that if the San Mateo County Recorder records this
lien, we have a very strong case against the IRS for an
illegal lien filing. We believe the IRS MUST find a way to
physically pull the lien so that it is not recorded. A
release isn't acceptable. It must not be recorded at all.

Since the sole purpose of a lien is to protect the
government's interest and there is NO liability remaining
and thus no interest to protect, it would be a very serious
violation of the taxpayer's rights to record this lien. It
is not the fault of the taxpayer that it is taking a very
long time to actually record the lien.

I also happen to know the County Recorder personally and we
will be showing him documents to prove that no liability
exists. Hopefully, I can convince him that knowingly
recording what amounts to a false lien could expose the
county to legal action as well.

Comments?
If as of the date that the IRS had presented the lien at the
County Recorder's Office for filing, the liability had not
been paid, then the IRS HAS THE RIGHT (within the limits of
the other rules) to have it recorded even if it has been
paid since. However, they also now must have a document
pending indicating that the liability is paid in full
(either a release or other statement indicating such) since
it has been.

The recourse that you want is proper ONLY if the payment of
the liability occurred before the date that the lien was
presented for filing. From your text, it appears that your
client's escrow date was AFTER the IRS had visited the
Recorder's Office. The only other choice is to show that
the lien was filed prematurely (but your story implies that
such was not the case - unless the scheduling of a CDP
hearing requires suspension of unrelated enforcement matters
against the same taxpayer from other issues).
 
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E

Eric Hoefnagel

I have a very interesting case in San Mateo County, CA. IRS
requested a lien filing a few weeks ago. Apparently, San
Mateo County is taking 45 days to actually record those
liens. This has been confirmed by the Revenue Officer and by
the Taxpayer Advocate in Oakland. Couple of weeks ago, the
taxpayer sold their home and voluntarily paid off the
liability in full (the lien had not been recorded when the
home closed so it wasn't paid off through the escrow).

Ironically enough, on this same taxpayer, we have a
Collection Due Process hearing and an Application for
Taxpayer Assistance Order in process for an ENTIRELY
DIFFERENT REASON having to do with a written promise that
the IRS would not file the lien. The Taxpayer Advocate wants
SB/SE to withdrawal the lien, but they are refusing to do
so. We may get a TAO issued to withdraw the lien.

Now, back to the primary purpose of this post. We strongly
believe that if the San Mateo County Recorder records this
lien, we have a very strong case against the IRS for an
illegal lien filing. We believe the IRS MUST find a way to
physically pull the lien so that it is not recorded. A
release isn't acceptable. It must not be recorded at all.

Since the sole purpose of a lien is to protect the
government's interest and there is NO liability remaining
and thus no interest to protect, it would be a very serious
violation of the taxpayer's rights to record this lien. It
is not the fault of the taxpayer that it is taking a very
long time to actually record the lien.

I also happen to know the County Recorder personally and we
will be showing him documents to prove that no liability
exists. Hopefully, I can convince him that knowingly
recording what amounts to a false lien could expose the
county to legal action as well.

Comments?
IRM 5.12.3.5 has the language that provides for a situation
like yours. It actually happens all too frequently. As you
indicated, it is a timing problem. The request for the
filing of the FTL is made by the R.O. or ACS. It takes a
certain amount of time for the lien to be prepared, the
check to the county to be written and the information to be
submitted to the county for the recording. Then, as you
stated, the county takes their time to do the actual
recording. Your client got caught in that timeline problem.

If you can prove that the lien was recorded AFTER the tax
was paid, you have the right to ask for a manual release
that you or your client can go record yourself. You also
have the right to ask for a letter from the IRS to the 3
credit reporting agencies to notify them that the lien was
filed inadvertantly and is now released.
 

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