Federal Tax Lien Filed In Error

There is any number of different ways by which the IRS mistakenly files a federal tax lien against you for your unpaid taxes. In California (and throughout the U.S.), federal tax lies are filed in the county in which you live: say, Los Angeles, Orange, Santa Barbara or Ventura county. If the IRS erroneously files a tax lien, you should file Form 12277: Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien. This application is based on Internal Revenue Code section 6323(j).

Erroneously Filed Notice of Federal Tax Lien

Treasury Regulation Section 301.6326-1 defines an erroneously filed Notice of Federal Tax Lien (NFTL) as one which is filed during the presence of one of the following conditions:

1. The tax liability was assessed in violation of a bankruptcy stay.

2. The statute of limitations for collection expired prior to the filing of the NFTL.

3. The tax liability was satisfied prior to the NFTL filing.

4. The tax liability was assessed in violation of deficiency procedures in Internal Revenue Code Section 6213.

Within 14 days of when an erroneous NFTL is identified, a Form 668Z, Certificate of Release of Federal Tax Lien, and Letter 544, Letter of Apology – Improvident/Erroneous Filing of Notice of Federal Tax Lien, must be issued by Advisory.

At your written request, a copy of the release and letter of apology may be furnished to creditors or credit bureaus. You may be instructed to provide names, mailing addresses, and permission to disclose the information.

Filing and release fees will be abated on erroneously filed NFTLs.

Improvident or Inadvertent Lien Filing

If an improvidently or inadvertently filed NFTL has been released, no consideration will be given to a request that the NFTL also be withdrawn.

When a NFTL is improvidently or inadvertently filed and then subsequently released, the Internal Revenue Service will provide you with a Letter 544.

If the criteria for release of a lien that has been improvidently or inadvertently filed are not present, the Internal Revenue Service will consider withdrawal of the NFTL.

Remember, a lien is not a levy. These two things are different from each other. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt. A levy is a legal seizure of your property to satisfy a tax debt.

For additional tax help, call Mitchell A. Port, a tax attorney in Los Angeles, for guidance. Call (310) 559-5259.