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Why Does the ‘Place of Filing’ Matter in an IRS Lien Case?

Posted by Brandon Keim | Jul 14, 2023 | 0 Comments

When it comes to liens relating to tax debt, other errors (even as important as an incorrect name) don't impact the lien's enforcement, but filing in the wrong location can have a significant impact. If the Internal Revenue Service (IRS) files a tax lien in the wrong location, the agency can lose its priority against other debtors who later file liens in the correct office.

Let's take a brief look at why the place of filing is so important.

A Matter of State and Federal Law

While, in most cases, the United States Internal Revenue Code determines federal taxes, there are circumstances when state law becomes relevant. The “place of filing” is one of those cases.

Since the property is located in a state, the IRS must follow the relevant state's law regarding its recording requirements. In Arizona, that means that liens must be filed in the county recorders' offices. 

The Filing Is the Notice

Since recording a lien is the only way most people (other than the debtor) will ever learn about a claim on the property, the place of filing becomes crucial because people have to know where to look for the lien.

Because you could hide a lien by filing it in a location where it wouldn't occur to anyone to look for it.

If a lien could be recorded anywhere, then—from a practical perspective—this would defeat the entire point of recording the documents.

Differences in Locations' Filing Practices

Arizona county recorders all follow state law. But in practice, there are still differences between the counties' offices. And even the smallest differences could result in confusion over which liens had priority.

For example, some counties may take longer to process the recorded document. And counties even have different office hours. That alone can affect when they accept or process a document since even one day (or a few hours) could change whose filing is first in time and therefore has first priority.

It's helpful to be aware of how technical aspects of the law can impact you; however, if you have any outstanding tax issues and are concerned about repayment, don't wait. Consult with a tax attorney. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.


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