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Part 5. Collecting Process

Chapter 12. Federal Tax Liens

Section 2. Lien Filing Requirements

5.12.2  LIEN FILING REQUIREMENTS Purpose and Effect of Filing a Notice of Federal Tax Lien (NFTL). Creation and Duration Taxpayer Contact Notice of Federal Tax Lien Determination Lien Filing Approval Preparing the NFTL Mutual Collection Assistance Requests (MCAR) Place for Filing of Notice of Federal Tax Lien  (05-20-2005)

  1. The purpose of filing the NFTL is to protect the Government’s right of priority against certain third parties, typically a purchaser, holder of a security interest, mechanic’s lienor, or judgment lien creditor (For additional information see IRM 5.17.2, Federal Tax Liens).


    The NFTL is not a negotiating tool and is to be used only in accordance with IRM 5.17.2 and 5.12.  (05-20-2005)

  1. A Federal Tax Lien (FTL) is created by statute and attaches to a taxpayer’s property and rights to property for the amount of the liability. This is the "statutory" or "silent" FTL. See IRC 6321. The following must occur for the FTL to arise:

    1. An assessment must have been made.

    2. A demand for payment must have been made.

    3. The taxpayer must have neglected or refused to pay. (As a matter of IRS policy the taxpayer is normally given 10 days from notification to pay the amount due.)


      In jeopardy situations the 10 day period may not always apply. You should confer with your manager and local Counsel.

  2. The FTL will continue until the liability is satisfied or becomes unenforceable by lapse of time or a bond is accepted in the amount of the liability.  (05-20-2005)

  1. The Service is required to make reasonable efforts to contact the taxpayer before filing a NFTL. The efforts to contact the taxpayer are to advise that a NFTL may be filed if full payment is not made when requested. Issuance of the statutory assessment notice and the balance due notices sent during the collection process will constitute reasonable efforts. Publication 594 (IRS Collection Process), CP 501 (Balance Due - Reminder), CP 504 (Balance Due - Urgent Notice), and Letter 1058 (Final Notice - Intent to Levy), advises the taxpayer that a NFTL may be filed. Also the ACS letters LT-39 (Reminder Notice) and LT-11 (Final Notice of Intent to Levy and Your Notice of Your Right to Hearing) warns taxpayers of possible NFTL filing.

  2. While the notices sent in the notice stream are sufficient for filing a NFTL, generally when a NFTL has not been previously filed the revenue officer’s determination with respect to the filing of the NFTL will be done in conjunction with the initial contact or initial contact attempt. Contact (request for full payment) may be made by:

    1. field contact (preferably).

    2. telephone.

    3. mailing a notice or letter to the last known address (when appropriate).

  3. If full payment is not received during initial contact, explain to the taxpayer that a lien may be filed. See below for lien filing criteria. Explain the possible effects of the NFTL filing on normal business operations and their credit rating.

  4. If the taxpayer disagrees with the proposed lien filing, advise the taxpayer of their right to appeal under the Collection Appeals Program (CAP). Also explain to the taxpayer their right to request a Collection Due Process (CDP) hearing under IRC 6320once the lien has been filed. See IRM 5.12.1  (05-20-2005)

  1. A NFTL filing determination must be made on all balance due cases including reactivated balance due cases within established time frames. The request for lien filing or the appropriate non-filing documentation must be prepared within 10 calendar days of initial or attempted contact, with the taxpayer or taxpayer representative. See IRM, Effective Initial Contact, for established time frames.

  2. If the taxpayer has not made full payment or other security arrangements (such as a Bond) to satisfy the liability, a lien determination will be made.

  3. When making a determination to file a NFTL, consider whether issuance of the L-1058 is also warranted, if it was not sent previously.
    For Example:Issuance of the L-1058 is appropriate when a taxpayer has been given a deadline and was advised of levy action for failure to comply. This action should only occur when a L - 1058 was not previously issued for the module(s) in question.


    By issuing the L-1058 at the same time the NFTL is being filed, the taxpayer will receive CDP hearing rights for the lien and levy concurrently. If the taxpayer chooses to exercise their CDP rights, both the lien and levy issues can and should be addressed together in Appeals

  4. The taxpayer’s filing and payment compliance should always be considered when the non-filing of a notice of Federal Tax Lien is being determined.

  5. When considering an extension of time to pay (up to 120 days) in accordance with IRM, NFTL(s) should be filed unless the case meets the criteria of IRM below.  (05-20-2005)

  1. In general, a NFTL should be filed in the following situations:


    there is an Unpaid Balance of Assessment (UBA) below $5,000 and filing the lien will promote payment may file a NFTL.


    This will also apply to additional assessments on currently open cases and those being reported as currently not collectable. You should take into account if assets are owned or the possibility of future assets being acquired during the collection statute period. In the case of accrual only liens, consider the amount of the accruals. (Accrual liens are discussed further in IRM

    If there is a UBA of any amount for an entity and the entity is not adhering to compliance requirements such as federal tax deposits, return filings, etc.file a NFTL.

    the aggregate UBA is $5,000 or morefile a NFTL


    Determine the need to file a NFTL when there are additional assessments. Use the transaction code date as the date of assessment for the liability.

    an installment agreement does not meet streamlined, guaranteed, or in-business trust fund express criteriafile a NFTL.

    an open account with an aggregate UBA of $5,000 or more is being reported as currently not collectiblefile a NFTL.

    a case involving both assessed and unassessed periods will be reported currently not collectiblethe NFTL filing may be held up to include both period types on the NFTL.


    You may also choose to file a NFTL on the current assessments and wait for the unassessed periods to be assessed, and then file for those periods as well.

    the property is exempt by the Federal Bankruptcy Code or state insolvency proceedingfile a NFTL to protect the government’s interest.

    the taxpayer resides outside the U.S. and has known assetsfile a NFTL. Contact requirements are waived.


    Even though there is no mandatory NFTL filing requirement prior to service of a Notice of Levy, before levying the Service should consider, for purposes of lien priority, filing a NFTL.

  2. Accrued interest and penalties added to tax should be collected during the limitation period for collecting the tax. Therefore a NFTL may be filed on accruals only modules if all assessed liabilities have been full paid. The limitation period does not apply to bad checks, fraud penalty or certain other penalties that carry a separate collection statute expiration date.

  3. Examples of when it is appropriate to file a notice of Federal Tax Lien are listed below:

    1. After your initial analysis of a law firm with three quarters of Form 941 liabilities, you determine that all notices requesting payment have been sent. You then make a field visit on 4/3/2004 to the taxpayer at the last known address. The office is closed and you leave a 2246 (calling card) with Publication 1 and 594 in a sealed envelope under the door. The calling card instructs the taxpayer to contact you by 4/12/2004. On 4/13/2004 you still do not receive any communication from the taxpayer. In this situation it is appropriate to file the Notice of Federal Tax Lien.

    2. During a field visit to a self employed taxpayer you request full payment of the tax liability of $4,000. As part of your compliance check you also inform the taxpayer that they are not current with their estimated tax payments and they must make those payments as well. The taxpayer makes payment for a portion of the tax liability ($1,000) and tells you they will make their estimated payments in 30 days. In this situation since the taxpayer is not in compliance and has not made full payment of the liability a NFTL may be filed.  (06-09-2005)

  1. When considering the non-filing of a NFTL determine if the taxpayer is in filing and payment (Federal Tax Deposits, estimated tax payments, notice accounts, etc.) compliance. You should also consider:

    1. The use of a collateral agreement(see IRM 5.6.1 for additional information).

    2. The subordination of the lien (for loan and financing situations)

    3. The discharge of the property (for removing specific property from the Federal Tax Lien)

    in lieu of not filing a NFTL (see IRM 5.12.3).

  2. In general, liens should not be filed when:

    1. The taxpayer is a defunct corporation whose assets have been previously liquidated.

    2. The taxpayer is deceased and there are no known assets in an estate.

    3. The taxpayer resides abroad and has no known assets in the United States.

  3. Liens should not be filed in the following circumstances:

    1. The taxpayer is a corporate entity that has gone through a liquidating bankruptcy or receivership regardless of dollar amount. Document the proceeding number in the case history.

    2. When a non-paying officer has been assessed the Trust Fund Recovery Penalty (TFRP) and an adjustment to the TFRP is pending because the assessment has been paid by another officer.

    3. There is an indication that the liability has been satisfied or that credits are available to satisfy the liability.

    4. The taxpayer is a financial institution under control of the Resolution Trust Corporation (RTC). See the section on "Withdrawal of Filed Notice of Federal Tax Lien" if a NFTL has been filed.

    5. The taxpayer is in bankruptcy and the NFTL relates to liabilities incurred before the taxpayer filed for bankruptcy. Section 362(a) of the Bankruptcy Code imposes an automatic stay that prohibits all creditors from taking certain collection actions against debtors in bankruptcy. A NFTL may be filed once the stay is lifted. In some circumstances, a NFTL may be filed for liabilities incurred after the taxpayer filed for bankruptcy. Consult Counsel to determine if a NFTL may be filed.

    6. There is genuine doubt as to the validity of the liability. But the revenue officer must document the taxpayer’s justification and the method of resolution (payment tracer, amended return, credit transfer etc.).

  4. A decision may be made to defer or not file a NFTL when the revenue officer can document a reasonable certainty that filing the NFTL will hamper collection.


    Following are examples of when it is appropriate to delay or not file a NFTL:

    1. During a field visit on 5/01/2003 to a "Not for Profit" taxpayer you are asked not to file a NFTL and consider an in-business installment agreement. It is explained that if a NFTL is filed, state funding, which is the principle funding source for the entity will be eliminated and they will not be able to make installment payments. You agree to delay filing the NFTL and request appropriate documentation from the entity be sent to you by 05/12/2003 and you will consider the IA or a NFTL will be filed. On 05/09/2003 you receive the documents and are able to document a reasonable certainty that the NFTL would hamper collection of the liability and determine not to file the NFTL and place the taxpayer in a manually monitored IA. You inform the taxpayer of the IA and the condition that a NFTL will be filed if they default on the installment agreement.

    2. During a field visit to a taxpayer who is in the business of selling vacation time shares, you determine that the tax liability cannot be paid immediately and that in all likelihood an installment agreement may resolve the unpaid balance. However, in order to obtain the funds to make the installment payments and pay other operating expenses, the taxpayer must sell accounts receivable to a factor on a weekly basis. The factor also requires that the taxpayer gives a security interest in all current and future accounts receivable. Filing a NFTL in this case would end the factoring arrangement. You agree to withhold the filing of the NFTL provided the taxpayer provides a copy of the contract, and remains cooperative and compliantwhile the installment agreement is being considered. You inform the taxpayer that not complying with the provisions will result in your immediate filing of the NFTL.


    Below are examples of when it is not appropriate to delay or not file a NFTL:

    1. During a field visit a taxpayer asks that you do not file a NFTL because it will negatively affect their credit. You ask if they can prove that the negative affect on their credit rating will "hamper" their ability to pay the liability. They inform you that they cannot prove that it will. In this situation filing the NFTL would be appropriate.

    2. During a field visit, the taxpayer informs you that they are planning to purchase a new car or possibly lease one to replace their current vehicle and the filing of the NFTL will negatively affect their credit. They ask you not file the NFTL. You ask if the car is essential to generate income to assist in the payment of the liability. The taxpayer informs you that the car is not essential for them to generate income. It would be appropriate to file a NFTL in this case.

    3. During a field visit on 4/1/2003 a taxpayer informs you that he/she has applied for a loan to pay the liability and other operating expenses of the business and requests that you do not file a NFTL. He/she explains that the loan agreement has a clause which indicates any additional lien filings will cause the proposed agreement to be null and void. You agree to delay filing a NFTL if the taxpayer supplies you with back up documentation for the completed financial statement and loan agreement from his financial institution by 4/15/2003 and become current with all FTD deposits. You also inform the taxpayer that if the documents are not received by the 15th, you will file the NFTL. You return to your office on 4/2/2003 and document your case history with the reason why you delayed filing the NFTL and indicate a follow up date of 4/15/2003. On 4/16/2003 you still have not received the documentation from the taxpayer or confirmation of the FTD payments. Since the taxpayer did not meet the specified deadline it is appropriate to file the Notice of Federal Tax Lien at this time without further contact with the taxpayer.

    4. After returning to the office from a field visit the previous day you have determined to file a NFTL because the taxpayer did not make full payment and they were not in compliance. The taxpayer calls you and asks that you not file the lien because they are selling their current home to full pay the liability and avoid enforcement actions. You tell the taxpayer that the lien is going to be filed to protect the Government’s interest in the home. The taxpayer tells you that the sale will not go through because of the lien. You then tell the taxpayer that a Release of Lien can be issued at the time full payment is made at the sale.

    5. After your initial analysis of a BMF taxpayer you plan to visit in the field tomorrow, you determine that they have not file several 941 returns and has not made federal tax deposits (FTD) for the current quarter. During your field visit the taxpayer informs you that they are currently under contract to sell their rights to a patent for a product they developed and the sale will more than pay the liability and the amount they estimate will be owed for the delinquent returns. They tell you that part of the agreement for sale is that there can be no liens associated with the patent and ask that you do not file a NFTL, at least until after the sale in 15 days. You review the contract and confirm the taxpayer’s claim. You tell them that you will delay the filing of the NFTL if they file all delinquent returns and pay all delinquent FTD within 10 days. On the tenth day you receive all delinquent returns but do not receive any of the funds promised for the FTD. Filing the NFTL in this situation would be appropriate due to the taxpayer’s non compliance and failure to meet the deadline set.

    6. During a field visit to the Power of Attorney’s office, the POA informs you that filing a NFTL will embarrass the taxpayer in their business community. In this case it would be appropriate to file the NFTL, unless the POA can prove that the NFTL would hamper the payment of the liability.

    7. During a field visit to an IMF taxpayer you request full payment of the $200,000 liability. The taxpayer tells you that they are in negotiations to sell their home (primary residence) but there is only $100,000 of equity in the home so they can’t full pay even with the sale. They ask that you not file the NFTL because it will ruin the sale. You ask the taxpayer to supply you with the appropriate documents (these may vary by location) to confirm their statement. They say that they cannot. In this situation it would be appropriate to file the NFTL and inform the taxpayer that they may request a discharge of the specific property when they are prepared to go to sale.

  5. The filing of a NFTL may affect a taxpayer’s credit rating, and in and of itself, this is not sufficient reason to withhold filing the NFTL.

  6. When a revenue officer determines not to file a NFTL temporarily, the action must be supported by an Integrated Collection System (ICS) history entry that clearly states why filing a NFTL is not proper at that time. The entry must also include a follow-up date by which the revenue officer will receive the requested information and/or payment, or the date the NFTL will be filed.

  7. The revenue officer will withhold filing the NFTL if the taxpayer has entered into a collateral agreement with the Service as provided in IRM 5.6. Revenue officers should document their case files and consult with Technical Services to ensure legal sufficiency.

  8. A taxpayer may submit a faxed request for non-filing of the NFTL if the revenue officer has made contact with the taxpayer by phone or in person. The revenue officer should document the case history with the date of contact and note the reasons why the taxpayer wishes the NFTL not to be filed. The revenue officer should also include the faxed document in the case file.  (05-20-2005)

  1. A decision not to file a NFTL must be supported by a history entry that clearly states why filing a NFTL is not appropriate.

  2. When the decision not to file the NFTL is made the revenue officer should ensure that the ICS lien determination field is properly updated on the case summary screen for each module.  (05-20-2005)

  1. The extension of the Lien Determination Date is not the same as deferring the filing of the NFTL. The Lien Determination Date extension is used only when a determination cannot be made prior to the lien determination date indicated on ICS when the entity or module is first received. This may occur in situations such as when the revenue officer has generally had no contact with the taxpayer and:

    1. Inventory is assigned and the revenue officer is placed on a detail assignment.

    2. Inventory is assigned and the revenue officer is attending training.

    3. Inventory is reassigned or transferred to the revenue officer.

    4. The revenue officer is out due to illness or planned leave.


    This is an example of when it is appropriate to extend the lien determination date:
    A revenue officer receives five new Bal. Due cases (all X coded for contact within 30 days) on Monday 4/11/2003. The lien determination date is indicated on ICS as 5/22/2003. The revenue officer is assigned a long term detail and is to report on Monday 4/25/2003 and will not return to their POD until Monday 6/13/2003. In this situation the lien determination date may be extended for a reasonable time frame allowing the RO to make an appropriate determination.
    In the above situation the RO should also have an appropriate history entry explaining why the initial contact was not timely.  (02-01-2007)

  1. Revenue officer group managers will note their review and approval of the lien filing in the ICS history for revenue officers below the GS-9 level or they may assign the lien filing responsibility to a revenue officer at the appropriate grade level.

  2. Liens filed by Dyed Fuel Compliance Officers below GS-9 will be reviewed and approved by a designated Examination manager.

  3. When a manual (ICS generated) NFTL is prepared, managers will sign the NFTL for revenue officers below GS-9 or the NFTL may be signed by a revenue officer at the appropriate grade level.

  4. In all cases document the case file.  (02-01-2007)

  1. A determination to file a NFTL by revenue officers below GS-9 must be approved by the manager prior to the NFTL being filed.

  2. If authorized by the group manager, GS-9 and above revenue officers may approve the NFTL determination for revenue officers below GS-9 and initiate the ICS NFTL request.  (03-01-2004)

  1. Managers of revenue officers below GS-9 are required to:

    1. review the taxpayer’s information

    2. verify the balance due, and

    3. affirm that the lien filing is appropriate given the taxpayer’s circumstances, considering the amount due and the value of the property or rights to property.

  2. In all cases, revenue officers must document the following information:

    1. A summary of any information the taxpayer provides that may affect the decision to file a lien.

    2. If the taxpayer provided information, the employee is to explain their review of the information and findings; and

    3. Verification that the amount is owed, e.g., the balance has been checked on IDRS.  (02-01-2007)

  1. The correct and timely preparation of the NFTL is the responsibility of the person assigned the balance due account.

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

  3. Group managers will create modules that require a NFTL for revenue officers on ICS for:

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

    2. do not exist on ICS.

  4. Revenue officers will use ICS to create liens that require expedited processing, i.e., prompt assessments and/or jeopardy or termination situations.


    Functional managers (other than revenue officers) may at their discretion have lower graded employees input NFTLs to the Automated Lien System. The manager is responsible for the accuracy of those documents.

  5. NFTLs must show the taxpayer's last known address. Employees will not include SSN's. 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.

  6. Multiple assessments against the same taxpayer may be included on one Form 668(Y)(c)


    there are one or more balance dues with multiple assessmentsprepare a separate entry in each column for each balance due. The dollar amount for each unpaid balance of assessment will be shown.

    there are multiple assessments on one balance dueshow the assessment dates and unpaid balance of all unpaid assessments including those penalties which carry a separate collection statute.

    an unassessed accrued amount remains outstanding and the assessed amount is paidfile a NFTL on the total accrued amount as of the date the NFTL is requested.

    the taxpayer’s name on the balance due is incorrectthe NFTL should state the taxpayer’s name correctly. Take the actions necessary to correct master file.


    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 balance due has the name of a third party, i.e., accountant, attorney, etc., and a NFTL is being filedensure that the address on the NFTL is the taxpayer’ s. A NFTL should never show the name and/or address of a third party or the names of corporate officers. When dealing with "c/o" be sure that the name and address on the NFTL is that of the taxpayer.

  7. Where a partnership is the taxpayer and employment taxes are involved, the NFTL should be prepared showing the words "a partnership " after the partnership name and list the names of known general partners, e.g.,

    1. XYZ, a partnership

    2. A, a partner

    3. B, a partner

    4. C, a partner


    When a general partner is listed on the NFTL, a copy of L3172 must be provided. See IRM

  8. File a 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 CLU, if appropriate, or create the NFTL.

  9. The NFTL should be prepared for a corporation showing the words "a corporation" after the corporate name, e.g., XYZ, Inc., a corporation.

  10. Revenue officers at the GS-9 level and above have the authority to issue Form 668(Y)(c). 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.

  11. Signatures are not required. However, documents generated by the ALS have facsimile signatures.

  12. Use the period when beginning (07-01-92) rather than the ending date (06-30-93) when preparing a NFTL for a Form 2290, Heavy Highway Vehicle Use Tax Return. 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.  (03-01-2004)

  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, i.e., 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 or partnership entity operates under a trade name other than the corporate or partnership name, e.g., Werk Hard, Inc., t/a The Diggers.  (02-01-2007)

  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. See IRC 6332 and 6303.

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


    a single partnership has multiple outlets or businessesone EIN should be assigned to that partnership.

    the same person established several partnershipseach partnership should be assigned a different EIN.

    there is any doubt that a change in name will affect the entityrequest an advisory opinion from Area Counsel through appropriate channels. See IRM, Entity Changes, for entity change procedures. BMF must reflect the name change.


    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 submittedprepare either a Form SS-4, Application for Employer Identification Number or Form 2363, Master File Entity Change.

    adding to or changing a partnership entitylist all partners adding "PTR" following the name of the last partner.

  3. A supplemental assessment will not be required when adding a general partner’s name to the partnership assessment. The Service will rely on the proposition that the assessment against the partnership creates a FTL against each general partner.  (02-01-2007)

  1. When filing an NFTL on a single member disregarded LLC entity, only the name of the single member should appear on the lien document. Do not include the name of the disregarded LLC. 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. IRM, Use of Trade Names, does not apply to single member LLCs.

  2. When a NFTL is incorrectly filed in the name of the disregarded LLC, file a new NFTL in the name of the single member.

  3. Withdraw the previously filed NFTL where the name of the disregarded entity was used.

    1. Do not release a previously filed NFTL filed in the name of the disregarded entity. This action would extinguish the underlying statutory lien.

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

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


    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 has that of a disregarded entity, the NFTL is still valid when it is filed in the name of the single member.

  5. 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 isthen the NFTL filing location is the

    a corporationSecretary of State or equivalent official specified in state law.

    a partnershiplocation provided for partnership filing in state law.

    an individualresidence of the individual (for personal property).


    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 LLClocation specified for the tax status elected by LLC or member status if single member LLC is also disregarded.  (02-01-2007)


  1. The NFTL must properly identify the name of the taxpayer so that the public is placed on notice. You must determine the tax classification of the Limited Liability Company (LLC) to identify the taxpayer.

  2. Care should be taken to ensure that the NFTL is filed properly by selecting the correct name and address for the taxpayer, determining whether the entity is a sole proprietorship, corporation or partnership, depending on the tax classification of the LLC; and the correct location for filing under state law, depending on the tax classification of the LLC.

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


    1At the ICS Summary Screen, enter F5, Entity Detail; select C, Name/Address; enter F10, Add REC.

    2Select Case Address; select Domestic Format, if applicable; selection O - Other Address.

    3Create a new name and address using only the name and address of the identified taxpayer, the LLC itself or the single member, as the primary name. If the LLC is the taxpayer, the new name may include the trade name. Enter F2, Save, enter ESC two times.  (02-01-2007)

  1. 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’. This may result in an administrative transferee assessment, suit to assert a transferee liability, or a suit to set aside a fraudulent conveyance.


    See IRM through for obtaining approval of special condition liens.

  2. Persons determined to be nominees or alter-egos are not entitled to collection due process appeal rights, however, they are entitled to appeal under the Collection Appeals Program (CAP). Issue L-3177 and related publications after the lien has been filed.

  3. The taxpayer whose liabilities for which the nominee liens were filed is entitled a collection due process hearing only if they have not received CDP notification (L3172) previously for the identified periods. Issue L3886, Notice to Taxpayer of Nominee/Alter Ego Federal Tax Lien Filing.

  4. L3886 is not generated by the Automated Lien System and must be manually prepared.

  5. Notification must be made by certified mail within five business days of the NFTL filing.

  6. See IRM 5.12.1 for more information on lien appeals. Additional information may also be found in IRM, Legal Reference Guide.  (02-01-2007)

  1. Revenue officers or Advisory will prepare NFTLs with special conditions (nominee, alter ego or transferee) that require property descriptions or special identifying language.

  2. The revenue officer will establish and document the decision to request a special condition NFTL. The request will be forwarded to the group manager for approval of the decision. The approved request will be forwarded to Advisory for review.

  3. Advisory will review the lien request and will forward the request to Area Counsel for review and approval to issue the NFTL.

  4. After receiving approval the revenue officer or Advisory will prepare NFTLs with special conditions (nominee, alter ego or transferee) that require property descriptions or special identifying language.

  5. ALS will allow users to input entity information for NFTLs with special conditions, but will not allow input of any data other than the standard information, i.e., MFT, tax period, TIN, etc. The NFTL must be manually prepared. DO NOT USE ALS TO CREATE THE NFTL.

  6. Use the ICS Form 668&Y)(c) macro. An option will be displayed that allows the selection of a special condition NFTL.

  7. Complete the entity section of the NFTL, identifying the special condition, i.e., nominee of, alter ego of, or transferee of taxpayer (input taxpayer name).



  8. On the face of the form, type the following:

  9. If the property description is short, type the description on the face of the form.

    Example: 1965 Ford Mustang, VIN 23J89765P777

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

  10. If the property description is lengthy, additional pages are available.

  11. Type the property description or language provided by area counsel into the template.

  12. Revenue officers will use ICS to secure a serial lien identification number.

  13. Advisory will secure the lien serial identification (SLID) number from ALS. The SLID may be obtained in two ways:

    1. directly creating a NFTL on ALS by inputting all applicable entity and tax period information.
      •Select the entity type as nominee to suppress the printing of the regular CDP notice. Also, selecting that entity type will automatically populate the first line of the lien with "Nominee of"
      •If created directly in ALS, Advisory will suppress the printing of the lien by answering (N)o to the question "Print and Store" before inputting the revenue officer's assignment number.
      •If the lien is to be field by the field, the question "On Voucher " should be marked as "N" .

    2. Request the SLID from CLU.
      •Complete Form 12626, Request for Filing or Refiling Notice of Federal Tax Lien.
      •Check the applicable box on the request form (SLID Only) to have the printing of the NFTL suppressed.
      •Insert the SLID on the NFTL.
      •Insert required entity and tax period, place of filing, etc., on the NFTL.
      •Scan the document into a PDF file and secure email the NFTL and any attachments to CLU. If scanning is not an option, mail or fax the NFTL to CLU. CLU will complete the billing and issuance process.

  14. Forward the completed document to CLU for processing, if the document is not hand carried for recording by the revenue officer.

  15. Advisory will notify the revenue officer of the lien filing, if necessary. The revenue office will prepare and issue the appropriate CDP and/or CAP letter(s) with attachments within the allotted time frame. ALS does not generate these letters. The Revenue officer must issue them. See IRM above.

  16. Employees not using ICS and that do not have ALS access, should forward requests for nominee, alter ego, or transferee NFTLs to Advisory. Advisory will ensure that counsel has approved the determination and complete the lien filing process. Advisory must also ensure that the appropriate CDP notice is issued.  (02-01-2007)

  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 TRAS for reimbursement.

  3. Recording offices in some jurisdiction accept the submission of Form 3982, Billing Support Voucher, for fee payment. The cost of filing will be added to their monthly invoice and submitted to CLU for payment.


    Fees may be more than the cost of a regular lien filing because of attachments. You should contact the recording office prior to recordation.

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

    Example: RO Smith forwards a nominee lien to CLU via secure email Wednesday morning. The document is retrieved by CLU Wednesday afternoon. The normal document print cycle is Thursday. RO Smith's nominee lien will be batched and mailed with documents scheduled for the Thursday print cycle.


    CDP notices for these documents must be manually prepared if they are hand carried to recording offices other than Tuesday or Thursday.  (02-01-2007)

  1. A nominee is someone designated to act for another. As used in the federal tax lien context, 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 FTL extends to property actually owned by the taxpayer even though a third person holds legal title. The third person can be any person listed in IRC 7701 (a) (1).


    See IRM for procedures for issuing nominee collection due processing notices.

  2. A nominee situation normally involves a fraudulent conveyance or transfer of a taxpayer’s property to avoid legal obligations. To establish a nominee lien 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 benefits.

  3. Request Area Counsel advice before filing a nominee lien. 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. other use or benefit from the property

    5. other relevant facts.

  4. You may not file a nominee lien without the written approval of Area Counsel.

    1. Cases should be developed to withstand court challenge (with minimal additional development).

    2. Focus should be for advice as to the need for a supplemental assessment, a new notice and demand and the language to be incorporated in the NFTL.

    3. Prepare a report containing all of the facts of the case to accompany the request.

    4. Request Area Counsel direction regarding enforcement of the lien.

  5. Subsequent enforcement action is at the Area Office’s discretion once Area Counsel has approved application of the nominee theory in writing.

  6. In determining what additional enforcement action should be taken, consideration must be given to the confusion in the chain of title and redemption rights of the taxpayer. These conditions may depress the sale of the property.

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

  8. The administrative seizure and sale process may be used if prompt action is needed to protect the governments' interest. If there is any doubt, request an opinion from Area Counsel.

  9. See IRM 5.17.2, Federal Tax Liens, for additional information.  (02-01-2007)

  1. Under certain circumstances a statutory lien continues to attach to transferred property even though a NFTL was not filed at the time of transfer. For example,

    1. The taxpayer (transferrer) 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. See section 6323(h)(6), Internal Revenue Code for a more complete definition of purchaser

    2. If a 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.

    3. 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.

  2. A nominee lien or a "specific property" lien filed in the name of the taxpayer and specifically describing the transferred property is not required to protect the government's interest when these conditions are met. Such liens should not be recorded.

  3. 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 transferee paid fair market value for the property instead of a quit-claim deed for love and affection. In these circumstances consider filing:

    1. a nominee lien (if the transfer was in name only), or

    2. a transferee lien (if the taxpayer gave title and use and control of the property to the transferee although no consideration was received).

  4. Minnie College owes $70,000 for tax periods 199912 and 20012. Minnie deeds property valued at $150,000 to her daughter, Molly for no cost. Minnie continues to maintain the property and uses it as collateral for obtaining a car. Molly lives on the property. Molly is a nominee for Minnie because consideration was not received for the property.

  5. William and Mary Black give a $600,000 home to their son Bob. William and Mary, have outstanding tax liabilities and state they have no property and cannot pay their liability. Bob maintains the property, the deed is in his name and he refinanced the home. Bob is the transferee in this case. Bob did not pay for the home. Bob also uses the home for collateral.  (02-01-2007)

  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 an adherence to the fiction of the separate existence of the corporation would, under the particular circumstances, sanction a fraud or promote an injustice.


    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,

    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, emergency lien foreclosure action or emergency transferee or fraudulent conveyance suit before filing a NFTL in the name of an alter-ego.

  6. Do not file a 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, 5.17, for additional information.  (03-01-2004)

  1. There are two methods the government can use to collect an unpaid tax liability where a taxpayer (the transferrer) has transferred property to a third party (the transferee) prior to or after the assessment of the tax. Collection of the tax is based on finding that the transfer was a fraudulent conveyance. However, liability may arise under contract, various federal liability statutes or state statutes governing bulk sales, corporate dissolutions, and corporate reorganizations.

    1. The first method, a suit to set aside a fraudulent conveyance, the government collects the transferrers tax from the transferred property. This is done by filing a civil action in U.S. District Court. See IRM

    2. The second method is administratively imposing transferee liability, which results in the imposition of personal liability for a tax on a third party. The liability is then collected from the third party’s property. To do this, the Commissioner mails a notice of transferee liability to the transferee, then, if a tax court petition is not filed or the liability is sustained by the Tax Court, assesses the tax against the transferee under the authority of IRC 6901.

    3. Once the assessment is made, a notice of demand and payment is issued, and if the transferee does not pay, a NFTL may be issued.

  2. You will find many of the same issues in transferee situations that are found in nominee and alter-ego situations. Refer to IRM 5.17.14 for additional information on fraudulent conveyances and transferee liability.

  3. Contact local Counsel for written authorization before issuing a transferee lien.  (03-01-2004)

  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).  (03-01-2004)

  1. Taxpayers may change names after the NFTL has been filed. To avoid disputes over lien priority in subsequently acquired assets, file another 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. Add the following statement to reference the original NFTL: This Notice of Federal Tax Lien is filed to modify Notice of Federal Tax Lien number (serial number), recorded (date), in Book ___, Page ___,by reflecting a new or proper name.

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

  4. With the advent of the DIAL interface, amended or corrected NFTLs should be rare. Amended or corrected NFTLs could affect the priority of the original NFTL.  (02-01-2007)

  1. Some errors, such as an incorrect name, will make the NFTL invalid while other errors such as TIN, MFT and period will prevent the module satisfaction notification from posting.

  2. Incorrect NFTLs must be linked to corrected NFTLs and/or corrected information.

  3. Module satisfaction notification must be associated with correct TIN/name control and MFT/period and tied back to the incorrect NFTL so that the Certificate of Release can be generated for BOTH the correct and incorrect notice upon satisfaction or expiration. A "not to be filed" lien is prepared by CLU to correct the error.

  4. Guidance is provided in IRM, Effect of Errors in Notice of Federal Tax Lien, regarding errors in the taxpayer’s name as it appears on the notice.


    it is determined that the NFTL should be correctedfile a new NFTL.

    the error on the original NFTL was made to the name control portion of the name line only and a new NFTL is not filedchange the name control on the original NFTL record.

  5. NFTLs may be corrected prior to filing. If the NFTL is been filed, an amended NFTL must be created.  (02-01-2007)

  1. Use ALS to create amended liens. ICS does not have an amend program. Revenue officers may use the Amend NFTL ALS option or request the amendment through CLU by secure emailing Form 12626 or the referral form.

  2. Listed below is a chart that explains how to correct other types of errors.


    Taxpayer Identification Number (TIN)This error type does not require a corrected NFTL document. Prepare a "not to be filed NFTL" in the database.

    MFTThis type of error does not require a corrected NFTL document. Prepare a "not to be filed NFTL" in the database.

    Tax PeriodBased on provisions of IRC 6320, taxpayers are entitled to collection due process appeal rights for each tax period with a liability for which a NFTL has been filed. File a new NFTL when the tax period is incorrect.

    Assessment DateAn amended NFTL document is required. The life of the NFTL is directly related to this date. The last day for refiling is computed within the ALS using the assessment date. If the assessment date is incorrect, the last day for refiling will be computed incorrectly. Amend the NFTL to correct the assessment date. If the NFTL self-releases, the self-release must be revoked. Revocation and filing a new NFTL is required to reestablish priority. Do not prepare a not to be filed NFTL. Do not issue a new CDP notice.

    Last Date for RefilingThe refile date on recorded liens may not be amended. The last date for refiling will be systemically corrected when the assessment date is corrected. Changes will not be made to that field for any reason. See IRC 6323(g).

    Dollar AmountAmend the NFTL when there is a substantial increase or decrease to the dollar amount as the result of an audit or keystroke (input) error.

    AddressNo action is required to correct the original NFTL. If the city, state and/or zip code are incorrect, a new NFTL may have to be filed in the correct recording office.


    This statement or a similar statement will be printed on the face of amended NFTLs. THIS NOTICE OF FEDERAL TAX LIEN IS FILED TO CORRECT (insert what is being corrected, i.e., tax period, assessment date, MFT, minor misspelling) ON THE ORIGINAL LIEN RECORDED (insert date of filing) AS RECORDING NUMBER (insert recorder’s number). ALL OTHER INFORMATION ON THE ORIGINAL NOTICE FILED IS CORRECT AND THAT INSTRUMENT REMAINS IN FULL FORCE AND EFFECT.

  3. The NFTL issued to the recording office is identified as an AMENDED LIEN.  (02-01-2007)

  1. Recorded NFTLs may be amended using the ALS Amend option. If recording data (i.e., the recording date, book, page, or other recorder information) is not in the ALS database, the amendment option may not be used.

  2. Do not use this option to add a new person or entity to the recorded NFTL.

  3. ALS amendments are restricted to:

    1. tax periods;

    2. taxpayer name (limited to occasions where the taxpayer is not identifiable by lenders);

    3. assessment date; and

    4. amount due on NFTLs (if the amendment is due to input error and results in a signification increase or decrease in the amount.)

  4. To amend the NFTL, take the following actions.

    1. Type "Amend" at the prompt or select the Amend option from the menu.

    2. Search for the appropriate NFTL by SLID, TIN, Last Name or Name.

    3. Select #7 Amend.

    4. Select from Prompts that appear at the bottom of the screen.
      •Select #3TP_INFO to correct the taxpayer name


      Amend should not be used to add a new name or entity to the NFTL.

      •select #5PERIODS and [E]dit periods to change the tax periods, assessment dates, or dollar amount.


      Dollar amounts may be amended only when a tax period or name is being amended.

    5. Select [P]rocess change or [N]o change from the prompts at the bottom of the screen.

    6. Press #5 Process, to complete the amendment. If process is not selected, you will not create a print file for the lien nor will the CDP notice be created.

    7. Select #8 Entity to return to the initial screen after receiving the message that the lien is in the print queue.

  5. Document the ALS history with the reason the amendment was required.


    ALS will generate the appropriate CDP notice.  (05-20-2005)

  1. The U.S. treaties with Canada, Denmark, France, Netherlands, and Sweden provide for collection assistance. A treaty partner may send a Mutual Collection Assistance Request (MCAR) to the United States Competent Authority for tax treaties, the Office of the Deputy Commissioner (International), LMSB.

  2. MCARs are received and processed by the Chief, International Operations, SB/SE.

  3. The Service can take distraint action against U.S. assets to collect foreign taxes for these five treaty partners, as well as other U.S. treaty partners in limited situations. Collection may require filing a Notice of Federal Tax Lien.  (03-01-2006)

  1. Process all MCARs lien requests as follows:

    1. Use the format shown in Exhibit 5.12.2-1 as a guide to prepare Form 668(Y), Notice of Federal Tax Lien. The information needed to complete Form 668(Y) is provided with the MCAR investigation sent to the revenue officer group.

    2. International will provide the serial number for the NFTL. Do not use any other number.

    3. Use the Taxpayer Control Number (TCN) assigned to the MCAR assessment by International as the identifying number on Form 668(Y), if the taxpayer identification number (TIN) is not known.

    4. Use the Last Day for Refiling collection statute date provided by International.

  2. The NFTL will be filed in the appropriate recording office. Return a copy of the NFTL to International.

  3. Do not request input of TC 582 or TC 360 for the NFTL filing fee. NFTL fees are not assessed against MCAR taxpayers.  (03-01-2006)

  1. International will be responsible for determining whether to refile any NFTLs and for requesting the release.

  2. Notices of Federal Tax Lien for refiling and certificates of release will be:

    1. Prepared by International and

    2. Forwarded to the appropriate revenue officer group for recording.

  3. Do not request input of TC 582 or TC 360 for the NFTL filing fees. Filing fees are not assessed against MCAR taxpayers.  (02-01-2007)

  1. It is important that Notices of Federal Tax Lien be filed in the proper jurisdiction to protect the governments' interest amongst other creditors. State law dictates the place of filing.

  2. Individuals:

    1. Real Property - file the NFTL in the recorder's office for the county where the real property is located;

    2. Personal Property (tangible or intangible) - In general, file the NFTL at the recorder's office for the county where the taxpayer resides at the time the NFTL is recorded because that is where the property is deemed to be located.

  3. Corporations and Partnerships:

    1. Personal Property - file the NFTL in the state and county where the principal executive office of the business is located. The principal executive office is deemed to be the residence of the corporation or partnership. Do not confuse the principal executive office with the principal place of business.

    2. Real Property - file in the recorder's office for the county where the real property is physically located.

  4. Clerk of the United States District Court - File with the office clerk if the state has not designated one office within the state that comports with federal law.

  5. Recorder of deeds of the District of Columbia - Personal property whether tangible or intangible, is deemed to be located in the District of Columbia if the taxpayer’s residence is located there or outside the United States at the time the notice of lien is filed.


    Exhibit 5.12.2-4, State Filling Locations, gives the filing locations for each state, the District of Columbia and Puerto Rico. Names of recording offices may be different in different states. many states now designate the Secretary of State as the one office for filing notices of lien against personal property of corporations, partnerships, and other entities.

  6. A NFTL encumbers motor vehicles, airplanes and vessels in the same manner as other personal property when a NFTL is filed in the recording office designated by state law as the residence of the taxpayer. Do not file Form 668(Y)(c) with Departments of Vehicles, FAA, or the U.S. Coast Guard or similar agencies. (See IRC 6323(f)(5)).

  7. Consult Area Counsel if there is any uncertainty regarding lien filing locations. Also, see IRM 5.17.2, Federal Tax Liens, for additional information.  (02-01-2007)

  1. The Texas Uniform Federal Lien Registration Act, Section 24.004, "Duties of the Filing Officer" specifies in paragraph (2) that county clerks will file Federal liens alphabetically in the real property records. If requested by the party submitting the document, it may be entered alphabetically in the personal property index, as appropriate. These additional entries include the same filing and certification information that was entered into the real property records.

  2. Employees requesting NFTLs for Texas will ensure liens are recorded in real property records. Further, to ensure recorders are aware of this requirement, CLU will attach an information notice to the front of batched documents forwarded to Texas recording offices.

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