26 U.S.C. § 6324A — Special lien for estate tax deferred under section 6166
submitted 50 years ago by Pub. L. 94-455 to r/title-26-INTERNAL-REVENUE-CODE · 1,045 words · no verdicts yet
This section lets an executor secure a section 6166 tax deferral with a special lien. The lien attaches to named property once the executor signs a required agreement. The Secretary must file notice for it to bind buyers or creditors.
This section lets the IRS put a special lien on estate property when an estate has chosen to pay its estate tax in installments over time, instead of all at once.
(a) General rule. If an estate elected to defer part of its tax under section 6166, the executor can also elect the protection in this section by filing the written agreement described in (c). Once filed, the deferred tax amount — plus any interest, penalties, and costs tied to it — becomes a lien for the government on the property named in that agreement.
(b) Section 6166 lien property. (1) This means real or other property interests that are expected to still exist when the deferral period ends, and that are named in the (c) agreement. (2) The Secretary* can't demand lien property worth more than the deferred tax amount plus the "required interest amount" (defined in (e)), valuing the property as of the estate tax's original due date and accounting for any existing lien, like one under section 6324B. (3) If the named property isn't worth enough to cover that required value, the Secretary can accept a bond for the shortfall instead, conditioned on paying the deferred amount on schedule.
(c) Agreement. This is a written document signed by everyone who currently holds any interest — even one they don't yet possess — in the property being named. By signing, each person consents to the lien and helps designate one "responsible person" who acts as agent for the estate's beneficiaries and everyone who signed, in dealing with the Secretary on section 6166 or section 6324A matters.
(d) Special rules. (1) The lien isn't valid against a buyer, secured lender, mechanic's lien holder, or judgment lien creditor until the Secretary files a notice meeting section 6323(f)'s requirements — a notice that never needs refiling. (2) The lien starts either when the executor is discharged from liability under section 2204, or, if earlier, when that notice is filed, and lasts until the deferred tax is fully paid or becomes uncollectible from too much time passing. (3) Even with a filed notice, the lien still loses to real-property tax and special-assessment liens protected under section 6323(b)(6), a mechanic's lien for repairs or improvements, and certain construction or improvement-financing security interests under section 6323(c)(3) — though those last two protections disappear for any security interest arising after the Secretary files notice that the deferred payments have been accelerated under section 6166(g). (4) A property can't be subject to both this lien and a lien under section 6324 for the same estate at the same time. (5) If the named property later becomes worth less than what's still owed, the Secretary can demand more property be added — but never more than the unpaid amount. If the estate doesn't add enough within 90 days of the Secretary's written demand, that failure itself counts as accelerating the remaining installments under section 6166(g). (6) While this special lien is in place, the Secretary can't also require a bond under section 6165 for the same tax.
(e) Definitions. The "deferred amount" is the total amount deferred under section 6166, measured as of the estate tax's original due date. The "required interest amount" is the total interest that would come due over the first 4 years of the deferral period on that deferred amount, measured the same way. The "deferral period" is however long the section 6166 election delays payment. If a tax deficiency* shows up later, the deferred amount, required interest amount, and deferral period are all recalculated separately, as of the due date of the first installment after the deficiency is spread across the remaining installments.
facts
In the case of any estate with respect to which an election has been made under section 6166, if the executor makes an election under this section (at such time and in such manner as the Secretary* shall by regulations prescribe) and files the agreement referred to in subsection (c), the deferred amount (plus any interest, additional amount, addition to tax, assessable penalty, and costs attributable to the deferred amount) shall be a lien in favor of the United States on the section 6166 lien property.
For purposes of this section, the term “section 6166 lien property” means interests in real and other property to the extent such interests—
can be expected to survive the deferral period, and
are designated in the agreement referred to in subsection (c).
The maximum value of the property which the Secretary may require as section 6166 lien property with respect to any estate shall be a value which is not greater than the sum of—
the deferred amount, and
the required interest amount.
For purposes of the preceding sentence, the value of any property shall be determined as of the date prescribed by section 6151(a) for payment of the tax imposed by chapter 11 and shall be determined by taking into account any encumbrance such as a lien under section 6324B.
If the value required as section 6166 lien property pursuant to paragraph (2) exceeds the value of the interests in property covered by the agreement referred to in subsection (c), the Secretary may accept bond in an amount equal to such excess conditioned on the payment of the amount extended in accordance with the terms of such extension.
The agreement referred to in this subsection is a written agreement signed by each person in being who has an interest (whether or not in possession) in any property designated in such agreement—
consenting to the creation of the lien under this section with respect to such property, and
designating a responsible person who shall be the agent for the beneficiaries of the estate and for the persons who have consented to the creation of the lien in dealings with the Secretary on matters arising under section 6166 or this section.
The lien imposed by this section shall not be valid as against any purchaser, holder of a security interest, mechanic’s lien, or judgment lien creditor until notice thereof which meets the requirements of section 6323(f) has been filed by the Secretary. Such notice shall not be required to be refiled.
The lien imposed by this section shall arise at the time the executor is discharged from liability under section 2204 (or, if earlier, at the time notice is filed pursuant to paragraph (1)) and shall continue until the liability for the deferred amount is satisfied or becomes unenforceable by reason of lapse of time.
Even though notice of a lien imposed by this section has been filed as provided in paragraph (1), such lien shall not be valid—
In the case of any real property subject to a lien for repair or improvement, as against a mechanic’s lienor.
As against any security interest set forth in paragraph (3) of section 6323(c) (whether such security interest came into existence before or after tax lien filing).
Subparagraphs (B) and (C) shall not apply to any security interest which came into existence after the date on which the Secretary filed notice (in a manner similar to notice filed under section 6323(f)) that payment of the deferred amount has been accelerated under section 6166(g).
If there is a lien under this section on any property with respect to any estate, there shall not be any lien under section 6324 on such property with respect to the same estate.
If at any time the value of the property covered by the agreement is less than the unpaid portion of the deferred amount and the required interest amount, the Secretary may require the addition of property to the agreement (but he may not require under this paragraph that the value of the property covered by the agreement exceed such unpaid portion). If property having the required value is not added to the property covered by the agreement (or if other security equal to the required value is not furnished) within 90 days after notice and demand therefor by the Secretary, the failure to comply with the preceding sentence shall be treated as an act accelerating payment of the installments under section 6166(g).
The Secretary may not require under section 6165 the furnishing of any bond for the payment of any tax to which an agreement which meets the requirements of subsection (c) applies.
For purposes of this section—
The term “deferred amount” means the aggregate amount deferred under section 6166 (determined as of the date prescribed by section 6151(a) for payment of the tax imposed by chapter 11).
The term “required interest amount” means the aggregate amount of interest which will be payable over the first 4 years of the deferral period with respect to the deferred amount (determined as of the date prescribed by section 6151(a) for the payment of the tax imposed by chapter 11).
The term “deferral period” means the period for which the payment of tax is deferred pursuant to the election under section 6166.
In the case of a deficiency*, a separate deferred amount, required interest amount, and deferral period shall be determined as of the due date of the first installment after the deficiency is prorated to installments under section 6166.
Source credit: (Added Pub. L. 94–455, title XX, § 2004(d)(1), Oct. 4, 1976, 90 Stat. 1868; amended Pub. L. 95–600, title VII, § 702(e)(1), Nov. 6, 1978, 92 Stat. 2929; Pub. L. 97–34, title IV, § 422(e)(6)(A)–(C), Aug. 13, 1981, 95 Stat. 316.)
- 1976Enacted · Pub. L. 94-455 · 90 Stat. 1868
- 1978Amended · Pub. L. 95-600 · 92 Stat. 2929
- 1981Amended · Pub. L. 97-34 · 95 Stat. 316
A history note hasn’t been published yet. The record shows enactment by Pub. L. 94-455 on 1976-10-04.
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