Place for Filing Lien on Personal Property

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 8557]

RIN 1545-AM64

Place for Filing Lien on Personal Property

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations regarding the place

for filing a notice of tax lien against personal property. Sections

1015(s)(1) (A) and (B) of the Technical and Miscellaneous Revenue Act

of 1988 (TAMRA), amended section 6323 of the Internal Revenue Code to

provide that a state conforming to or reenacting a federal law

establishing a national filing system is not considered to have

designated a second office for filing a notice of tax lien. TAMRA also

amended section 6323 to provide that the filing of a notice of federal

tax lien is governed solely by the Internal Revenue Code and is not

subject to any other federal law that establishes a national filing

system.

EFFECTIVE DATE: These final regulations are effective April 21, 1993.

FOR FURTHER INFORMATION CONTACT: Robert A. Walker, 202-622-3209 (not a

toll-free call).

SUPPLEMENTARY INFORMATION:

Background

These final regulations amend the Procedure and Administration

Regulations (26 CFR part 301) under section 6323 of the Internal

Revenue Code (Code). The regulations reflect the amendment of section

6323 by sections 1015(s)(1) (A) and (B) of the Technical and

Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3573)

(TAMRA).

The IRS published a notice of proposed rulemaking in the Federal

Register on April 22, 1993, (58 FR 21550) providing proposed rules

under section 6323 of the Code. No public comments were received and

accordingly, the final regulations are substantially identical to the

proposed regulations. Certain minor stylistic changes have been made.

Explanation of Provisions

Sections 1015(s)(1) (A) and (B) of TAMRA amended section 6323(f) of

the Code by clarifying that a state's conformance to or reenactment of

a federal law establishing a national filing system for personal

property does not constitute a second office for filing in that state.

The existing regulations provide that if a state has designated more

than one office for filing liens, the IRS must file the notice of tax

lien with the clerk of the appropriate United States district court.

TAMRA also clarified that the filing of notices of liens by the IRS is

to be governed solely by the Code and is not subject to any other

federal law establishing a national filing system.

TAMRA's amendments to the Code were in response to United States v.

Air Florida, Inc., 56 B.R. 732 (S.D. Fla. 1985). In that case, the IRS

filed its Notice of Federal Tax Lien with the clerk of the county

circuit court, but the court held that under section 6323(f)(1) the IRS

was instead required to file its Notice of Federal Tax Lien in the

office of the clerk of the United States district court. The court

found that the State of Florida had designated not one, but two offices

for the filing of Federal tax liens against personal property: The

office of the clerk of the circuit court of the county in which the

personal property was located and, because the state had adopted the

U.S. government's national filing system for civil aircraft, the

F.A.A.'s offices in Oklahoma City, Oklahoma. The final regulations

revise Sec. 301.6323(f)-1 by providing that state law that conforms to

or reenacts a federal law establishing a national filing system does

not constitute a second office for filing; by providing that the filing

of liens is not subject to federal laws (other than the Code)

establishing a national filing system for liens; and by adding two

examples, one of which resembles the fact pattern of the Air Florida

case.

Special Analyses

It has been determined that this Treasury Decision is not a

significant regulatory action as defined in EO 12866. Therefore, a

regulatory assessment is not required. It has also been determined that

section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5)

and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to

these regulations, and, therefore, a Regulatory Flexibility Analysis is

not required. Pursuant to section 7805(f) of the Internal Revenue Code,

the notice of proposed rulemaking was submitted to the Chief Counsel

for Advocacy of the Small Business Administration for comment on its

impact on small business.

Drafting Information

The principal author of these proposed regulations is Robert A.

Walker, Office of the Assistant Chief Counsel (General Litigation),

IRS. However, other personnel from the IRS and Treasury Department

participated in their development.

List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income

taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 301 is amended as follows:

Paragraph 1. The authority citation for part 301 continues to read

in part as follows:

Authority: 26 U.S.C. 7805 * * *.

Par. 2. Section 301.6323(f)-1 is amended as follows:

1. Two sentences are added at the end of paragraph (a)(2).

2. Paragraphs (c) and (d) are redesignated as paragraphs (d) and

(e), respectively.

3. A new paragraph (c) is added.

4. Newly designated paragraph (e) is amended by adding Example 5

and Example 6.

5. The additions and revisions read as follows:

Sec. 301.6323(f)-1 Place for filing notice; form.

(a) * * *

(2) * * *

A state law that conforms to or reenacts a federal law establishing

a national filing system does not constitute a designation by state law

of an office for filing liens against personal property. Thus, if state

law provides that a notice of lien affecting personal property must be

filed in the office of the county clerk for the county in which the

taxpayer resides and also adopts a federal law that requires a notice

of lien to be filed in another location in order to attach to a

specific type of property, the state is considered to have designated

only one office for the filing of the notice of lien, and to protect

its lien the Internal Revenue Service need only file its notice in the

office of the county clerk for the county in which the taxpayer

resides.

* * * * *

(c) National filing system. The filing of federal tax liens is to

be governed solely by the Internal Revenue Code and is not subject to

any other federal law that may establish a national system for filing

liens and encumbrances against a particular type of personal property.

Thus, for example, the Service is not subject to the requirements

established by the Federal Aviation Agency for filing liens against

civil aircraft in Oklahoma City, Oklahoma.

* * * * *

(e) * * *

Example 5. The law of State F provides that notices of lien

affecting personal property are to be filed with the clerk of the

circuit court in the county in which the personal property is

located. State F has conformed state law to federal law to provide

that all instruments affecting title to an interest in any civil

aircraft of the United States must be recorded in the Office of the

Federal Aviation Administrator (FAA) in Oklahoma City, Oklahoma. On

July 1, 1990, a tax lien arises against ABC airline, which owns

aircraft situated in State F. The Internal Revenue Service files a

Notice of Federal Tax Lien with the clerk of the circuit court in

the county in which the aircraft is located but does not file the

notice with the FAA in Oklahoma City, Oklahoma. Because the FAA

system adopted by State F does not constitute a second place of

filing pursuant to section 6323(f), the federal tax lien is validly

filed.

Example 6. Assume the same facts as Example 5 except that State

F did not reenact or conform state law to the FAA requirements. The

result is the same because the filing of federal tax liens is

governed solely by the Internal Revenue Code, and is not subject to

any other national filing system.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved: June 10, 1994.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 94-18193 Filed 7-26-94; 8:45 am]

BILLING CODE 4830-01-U