part5-96

Under IRC § 6325(a), a certificate of release of a NFTL must be
issued within 30 days after determining that the taxpayer’s outstanding
obligation covered by the lien (including any interest, additional amount,
addition to the tax, or assessable penalty, together with any additional costs
that may have accrued) is fully satisfied. (See Law Enforcement Manual V,
section 5.12.3 relating to tolerance balances due).

When payment is made by personal check, the 30 day release period will
begin after 15 working days of receipt. This will permit sufficient time for
the check to clear. A release may be issued immediately upon presentation
of the canceled check.

If a credit line check is received, the 30 day release period will begin
after 15 working days from receipt. However, if the credit line check is certified,
issue an immediate release.

Accounts satisfied by cash, postal money order, certified check, cashiers
check, official bank check or guaranteed draft drawn on any federally chartered
or state licensed financial institution, may be released immediately upon
payment.

Liens will be considered satisfied and manual releases should be requested
when any of the following conditions exist:

The word “unenforceable”
means unenforceable as
a matter of law, and not merely uncollectible. See IRM 5.9.17.4.1 regarding
the release of lien in bankruptcy cases.

A NFTL filed on a form with a revision date of 12/82 or later does not
require that a separate certificate of release be issued when the statutory
period for collection has expired unless the NFTL has been refiled or a request
is made for a separate release.

A NFTL refiled on Form 668(F), Notice of Federal Tax Lien, is not self-releasing.
A certificate of release must be filed when the liability becomes unenforceable.

Issue a release of a NFTL within 30 days of accepting a bond securing
the payment of the amount assessed (including any interest, addition to tax,
assessable penalty, together with any accrued costs) within the time agreed
to in the bond, but not later than six months before the expiration of the
statutory period for collection. See IRC § 6325(a)(2).

The bond must be executed by a surety company holding a certificate
of authority from the Secretary of the Treasury, or, in the discretion of
the area director, collateral may be accepted within established limits (see
IRC § 7101 and § 7102). A listing of approved sureties is contained
in Department Circular 570, Treasurys Listing of Approved Sureties, which
is available on the internet at fms.treas.gov/c570. The acceptability of a
surety, other than a Treasury approved surety, will be determined on a case
by case basis.

When an offer in compromise (OIC), including a collateral agreement,
is accepted, the NFTL will be released upon payment of the offered amount.

Requests for the issuance of a certificate of release may be made by
OIC units with ALS access.

OIC managers with access to ALS may approve the issuance of a certificate
of release on the ALS system for a joint liability only when the OIC has been
accepted from both taxpayers.

OIC Units without ALS access will FAX a document to the CCP-LU containing
the following information:

OIC unit managers may issue a certificate of release when extenuating
circumstances exist, e.g., innocent spouse, non-petitioning spouse, co-obligors,
etc. See Exhibit 5.12.3–2. Use the procedures in (4) above for requesting
the release.

Issue a Certificate of Release of Federal Tax Lien to the nonpaying
officer(s) on a trust fund recovery penalty assessment when one officer has
paid the liability in full. This will be done even though the liability has
not been abated pending the expiration of the statutory period during which
a claim for refund by the paying officer may be made.

When one party on a jointly filed NFTL files bankruptcy and is discharged,
TC 400 will be used to adjust the joint account.

The TC 400 will not cause the module to update to master file status
12. Therefore, IDRS will not issue a notification of satisfaction to the Automated
Lien System (ALS) for release of the NFTL.

A certificate of release for the party discharged must be manually prepared.
See Exhibit 5.12.3–1.

IRC § 6015 grants relief to a spouse when it is determined that
he or she is not responsible for the liability.

Issue a release for the taxpayer who is not responsible for the liability.

Use the Automated Lien System to generate the release. Specific wording
has been added to the database to clearly identify the innocent spouse.

After receipt of a properly completed request, issue a certificate of
release as soon as it is determined that the lien is satisfied. Any request
which is incorrect or incomplete will not trigger the release.

Requests for a certificate of release may be accepted by fax.

Notify the taxpayer when additional information is needed to identify
the NFTL to be released, or give the reason why a certificate of release will
not be issued.

Timely release of the NFTL is essential. IRC § 7432 gives taxpayers
the right to sue the federal government if the Service knowingly or negligently
fails to release a NFTL. Recovery is limited to actual, direct economic damages
sustained by the taxpayer which, but for the actions of the IRS, would not
have been sustained, plus the costs of the action.

Prior to being awarded damages, the taxpayer is required to request
a release of NFTL in writing.

Publication 1450, Request for Release of Federal Tax Lien, explains
when a Certificate of Release of Federal Tax Lien may be issued and the required
content of the request.

An immediate or expedite release is one that is
requested when more than 30 days have elapsed since the date of satisfaction,
or when the taxpayer wants to pay the liability to secure a release for such
things as the transfer of property or the completion of other financial transactions.
See IRM 5.12.3.2.1(4) for acceptable methods of payment that allow an immediate
lien release.

Follow these procedures:

When a taxpayer wants to pay the liability in full in order to secure
an immediate lien release, do the following:

DO NOT issue an immediate release when credit or debit cards are used
to full pay the tax liability. Credit and a debit cards are barred for immediate
release of lien because of the possibility of chargeback of such payments
over a period of months. It is unlikely that a release will be requested from
a credit or debit card payment because the Service may accept such payments
only within three years after assessment. See IRM 5.14.10.5. However, if a
debit or credit card is accepted to satisfy a tax year and a request for release
is received, the lien may not be released until the period for chargeback
has run. The maximum period for chargeback is 120 days for payment by credit
card under 15 U.S.C. § 1666, and 100 days for payment by debit card under
15 U.S.C. § 1693f.

Issue a certificate of release when full payment of the liability is
made by electronic funds transfer (EFT) . These payments become irrevocable
in a short period of time.

When a NFTL is improvidently or inadvertently filed and then subsequently
released, provide the taxpayer with Letter 544.

If the criteria for release of a lien that has been improvidently or
inadvertently filed are not present, consider withdrawal of the NFTL.

If an improvidently or inadvertently filed NFTL has been released, no
consideration will be given to a request that the NFTL also be withdrawn.
See IRM 5.12.3.37.

Treasury regulation 301.7432-1 details the administrative claim procedures
of IRC § 7432.

Send the administrative claim to the Advisory Group Manager in the area
office where the taxpayer currently resides. There is no standard form used
for preparing a claim. It must contain the following information:

Each claim will be reviewed by Advisory to ensure that it contains the
required information.

If the claim does not contain the information required in (2) above,
notify the taxpayer in writing within 14 days advising of the deficiencies
and that the claim is not processable.

Use Letter 2730, Non-processable Claim for Damages Letter, to notify
the taxpayer of any claim deficiencies.

Administrative review of the claim must be completed within 30 days
of receipt of a processable claim.

A taxpayer must file an action in federal district court within two
years after the cause of action accrues. If the taxpayer files an administrative
claim within the last 30 days of the two-year period of limitations, the taxpayer
may file an action in federal district court any time after the administrative
claim is filed and before the expiration of the period of limitations, without
waiting for 30 days to expire or for a decision to be rendered on the claim.

Use Letter 2732, Notification of Full or Partial Denial of Claim for
Civil Damages, or Letter 2733, Notification of Full or Partial Allowance of
Claim for Civil Damages, to notify the taxpayer of the results of the administrative
review of the claim. If only a portion of the claim is approved, both pattern
letters will be sent to the taxpayer at the same time. These letters are signed
by the Advisory Territory Manager who has the delegated authority to approve
or reject the claim. See Delegation Order 5-4.

There is no administrative appeal of a rejected claim for damages under
IRC § 6325, however, under IRC § 7432 the taxpayer may bring a civil
action for damages in a district court of the United States.

If the taxpayer files suit under IRC § 7432, see IRM 25.3.3.8 for
guidance in responding to the filing.

Date stamp the claim upon receipt. Advisory should complete the review
within 30 days of receipt.

Open an OI on ICS under 101- Claim Other. Review the closed files for
any prior claims.

Address the following issues in determining if a claim is administratively
allowable:

Evaluate the facts and circumstances of each case.

If the claim is made without proof or proper substantiation of damages,
the taxpayer should be contacted immediately and told of the requirement to
provide verification that these damages have been incurred. The Advisor charged
with reviewing and making the initial determination should approach this task
with the recognition that it is possible that actual economic damages can
accrue as a result of untimely NFTL releases. When faced with issues that
do not present a clear-cut solution, consult with Area Counsel.

The reviewer must determine if the IRS knowingly or negligently failed
to release a NFTL under IRC § 6325 and whether the failure caused direct
economic damages which the taxpayer could not avoid.

The reviewer must ascertain the point in time when the taxpayer became
aware of the violation for the purpose of determining if the claim should
be rejected for timeliness.

The amount of an approved administrative claim awarding damages is guided
by the following criteria:

Area Counsel must review and concur with all claim determinations.

Release the NFTL if it is determined the IRS knowingly or negligently
failed to release the NFTL under IRC § 6325.

The reviewer will provide written notification to the taxpayer of the
determination.

If an administrative claim is submitted to the approving official, Compliance
personnel involved with the filing of the NFTL may be asked to prepare a memo
explaining the facts of the case. This should include any documentation which
confirms or contradicts the taxpayer’s statements.

If a claim is approved, prepare an original and three copies of:

Forward the original voucher (FMS Form 197) for signature to the taxpayer
with Letter 2733, Notification of Full or Partial Allowance of Claim for Civil
Damages.

When the signed form is returned by the taxpayer, the approving official
will sign FMS Form 197 and provide the taxpayer with a copy.

Use Letter 2734, Processing Letter for Financial Management Services
Claim Group, to forward the original and three copies of the forms listed
in (2) above to the Judgment Fund Branch, Funds Management Division, Financial
Management Service, Department of the Treasury, Room 6N34, US GAO Building,
441 G Street, NW, Washington, DC 20548.

If the taxpayer requests a check in lieu of electronic deposit, FMS
will return the check to the contact person listed on FMS Form 196 who will
forward the check to the taxpayer.

Mail the check to the taxpayer with a cover letter (locally designed)
that specifies the date and the amount of the check.

There are several provisions for issuing a certificate of discharge.

A third party owner has the right under IRC § 6325(b)(4), to receive
a certificate of discharge on any property subject to a lien if the third
party owner:

All amounts received based on third party applications for the issuance
of a discharge will be treated as deposits under IRC § 6325(b)(4), unless
a written waiver is received.

Follow established procedures for processing and disposition of the
bond (IRM 5.6.1.2.1). Advisory procedures are found in IRM 5.6.1.5.

The third party owner may request the return of the deposit or a release
of the bond on the grounds that the Services determination of value is incorrect.

Third party owners have 120 days after the day the certificate of discharge
is issued to file a civil suit. If suit is not filed, the Service has 60 days
to apply the deposit, collect on the bond, or refund any excess amount. See
IRM 5.12.3.12.3.1.

If a cashiers check, cash, or other type of certified funds is received:

A control number will be assigned by the Campus.

When the case is resolved, prepare the necessary documentation to have
either all or part of the money refunded to the third party or applied to
the taxpayers account.

If a certificate of discharge is issued to a third party owner under
IRC § 6325(b)(4), the third party owner may, within 120 days of the certificate
being issued, bring a civil action against the government in a district court
of the United States, for a determination of whether the value of the governments
interest in the property is less than the value determined by the Secretary.

No other action may be used for this determination.