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who enter into written agreements with
the taxpayer before the NFTL is filed.
The simple list is the following: real
property construction or improvement
financing agreements, obligatory dis-
bursement agreements, commercial
transaction financing agreements, and
security interests in property existing at
the time of the filing created by dis-
bursements made within 45 days after
the NFTL.
The second limit the type of property
is more important to discuss. This rule
provides creditors with priority only in
the following types of property: paper
of a kind ordinarily arising in commer-
cial transactions, accounts receivable,
mortgages on real property, and, in
certain circumstances, inventory. To
illustrate, Acme Corporation is subject
to an unfiled silent lien. Bank XYZ pro-
vides Acme with a loan secured by
accounts receivable and inventory. The
NFTL is filed on January 1. Without this
special rule, Bank XYZ would have pri-
ority only in inventory and accounts
receivable Acme possesses on or
before January 1. Thanks to this spe-
cial rule, Bank XYZ will also have prior-
ity in inventory or accounts receivable
acquired on January 1. Bank XYZ will
have priority in all inventory and
accounts receivable obtained on and
up to February 15. But on February 16,
Bank XYZ will lose the protection of the
special rule and the government will
have priority in any inventory or
accounts receivable acquired on that
day forward.
Superpriority
Finally, 10 types of creditors enumerat-
ed in the Code have priority despite the
NFTL filing. Because of this, they are
said to have "superpriority" over the
IRS. Detailing the requirements for
each is beyond the scope of this arti-
cle, but they are listed in IRC 6323(b)
and include the following:
1. Purchasers or holders of securities,
2. Purchasers of a motor vehicle,
3. Purchasers of tangible personal
property purchased at a retail sale,
4. Personal property purchased in a
casual sale,
5. Holders of a possessory lien,
6. Holders of a lien against real property
for the repair or improvement of a
personal residence,
7. Certain attorneys' fees,
8. Certain state and local taxes that
attach to real property,
9. Certain insurance contracts, and
10. Certain loans secured by deposits.
Conclusion
The federal tax lien is effective starting
from the date of assessment of a
tax. Once notice of the lien is filed, the
government's interest is so powerful
that it will take priority over most credi-
tors. Because taxpayers rely on financ-
ing and purchases to conduct their
business, and because creditors or
purchasers could unknowingly enter
into transactions in which they have a
secondary interest behind the IRS, it is
very important to understand when the
IRS tax lien has priority. Because the
power of the federal tax lien makes it
very difficult for taxpayers to conduct
business, many will wish to pursue
options for removal, discharge, or sub-
ordination of the federal tax lien. The
next and final article in this series will
explain the rules and procedures for
accomplishing this goal.
Laura E. Pisarello,
Esq. is an attorney
with
Convicer,
Percy & Green in
Glastonbury.
She
concentrates in tax
controversy, includ-
ing representation before the IRS and
the
Connecticut
Department
of
Revenue Services. In addition, she
handles probate matters, estate plan-
ning,
and
business
succession
planning. She can be reached at
lpisarello@convicerpercy.com. Special
thanks to Attorney Eric L. Green for
use of his materials and Attorney
Richard G. Convicer for his review and
helpful comments.
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