CTRS CTRS Tax Liens and Levies — Advanced Strategies

Question 1

What is a 'Certificate of Discharge' and when would a taxpayer seek one?

Accepted Answer

A certificate that removes the federal tax lien from a specific piece of property, commonly sought during a real estate sale to allow the transaction to close

Answer

A document that permanently releases the taxpayer from all federal tax obligations

Answer

A certificate confirming that all tax liabilities have been paid in full

Answer

A court order discharging tax debts in bankruptcy proceedings

Question 2

What is a 'Certificate of Subordination' and how does it benefit a taxpayer?

Accepted Answer

It allows a creditor with a junior lien to move ahead of the federal tax lien in priority, enabling the taxpayer to obtain financing they otherwise couldn't

Answer

It subordinates the taxpayer's obligation to pay the federal tax lien to state tax authorities

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It reduces the amount of the federal tax lien by the amount of subordinate debt

Answer

It transfers the federal tax lien to a related party

Question 3

What property is exempt from IRS levy under IRC §6334?

Accepted Answer

A minimum amount of weekly wages, unemployment benefits, workers' compensation, certain pension and retirement benefits, and primary home equity under specific conditions

Answer

All retirement accounts regardless of balance

Answer

The taxpayer's primary residence in all circumstances

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All assets owned jointly with a non-liable spouse

Question 4

What is a 'nominee lien' in the context of federal tax collection?

Accepted Answer

A lien the IRS places on property held by a third party (the nominee) who holds it on behalf of the taxpayer to shield it from collection

Answer

A lien filed in the name of the taxpayer's spouse instead of the actual taxpayer

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A lien that names a fictitious entity as the debtor

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A lien the IRS files in a county where the taxpayer does not reside

Question 5

What is the 'wrongful levy' action under IRC §7426 and who can bring it?

Accepted Answer

A third party whose property was wrongfully seized by the IRS to satisfy another person's tax debt can bring a wrongful levy action to recover the property or its value

Answer

The taxpayer themselves can bring a wrongful levy action for any levy they believe is improper

Answer

Only the taxpayer's attorney can bring a wrongful levy action on the taxpayer's behalf

Answer

Only state governments can challenge IRS levies through wrongful levy actions

Question 6

What is the standard for the IRS to release a Notice of Federal Tax Lien after full payment?

Accepted Answer

The IRS must release the lien within 30 days after the liability is fully satisfied or becomes legally unenforceable

Answer

The IRS has up to 180 days to release a lien after full payment

Answer

Lien release requires a formal taxpayer application and takes 60-90 days

Answer

Liens are automatically released only when the CSED expires, not upon payment