830 CMR: DEPARTMENT OF REVENUE
830 CMR 62C.00: STATE TAX ADMINISTRATION
830 CMR 62C.00 is repealed and replaced with the following:
830 CMR 62C.50.1: Lien on Property
830 CMR 62C.50.1: Lien on Property
830 CMR: DEPARTMENT OF REVENUE
(1) Statement of Purpose; Effective Date; Outline of Topics.
(a) Statement of Purpose. This regulation explains the application of M.G.L. c. 62C, § 50, as amended by St. 2004, c. 262, § 26. This amendment extended the duration of Department of Revenue liens by adopting the federal limitations period of ten years, or such longer period as permitted by section 6322 of the Code and regulations promulgated thereunder. The provisions of M.G.L. c. 62C, § 50 apply to any tax liability, inclusive of penalties, interest, costs, forfeitures or additions to tax which remained due and unpaid as of January 1, 2005. St. 2004, c. 262, § 70.
(b) Effective Date. This regulation is effective upon promulgation.
(c) Outline of Topics. This regulation is organized as follows:
1. Statement of Purpose; Effective Date; Outline of Topics
4. Validity of Lien Against Mortgagees; Pledgees, Purchasers and Judgment Creditors
5. Refiling of Notice of Tax Lien
6. Release of Lien
7. Partial Release of Lien: Certificate of Subordination
8. Revocation of Certificate of Release of Lien; Reinstatement of Lien
(2) Definitions. As used in 830 CMR 62C.50.1
Adequate and Full Consideration in Money or Money's Worth, a consideration in money or money's worth having a reasonable relationship to the true value of the interest in property acquired. The phrase "money or money's worth" includes any money, a security, tangible or intangible property, services, and other consideration reducible to a money value. The phrase "adequate and full consideration in money or money's worth" includes the consideration in a transaction in which the purchaser has not completed performance of his obligation, such as the consideration in an installment purchase contract, even though the purchaser has not completed the installment payments.
Code, the Internal Revenue Code, as amended and in effect for the applicable period.
Interest in Property, each of the following interests is considered to be an interest in property if it is not a lien or security interest:
(a) A lease of property;
(b) A written executory contract to purchase or lease property;
(c) An option to purchase or lease property and any interest therein; or,
(d) An option to renew or extend a lease of property.
Judgment Creditor, a person who has obtained a valid judgment in a court of record and of competent jurisdiction for the recovery of specifically designated property or for a certain sum of money. The term judgment does not include the determination of a quasi-judicial body or of an individual acting in a quasi-judicial capacity. In the case of a judgment for the recovery of a certain sum of money, a judgment on the property involved. A judgment lien does not include an inchoate lien, such as an attachment lien, unless and until such lien has ripened into a judgment.
Mortgagee and Pledgee, a person who holds any interest in property acquired by contract for the purpose of securing payment or performance of an obligation or indemnifying against loss or liability. Such security interest exists at any time:
(a) If, at such time, the property is in existence and the interest has become protected against a subsequent judgment lien arising out of an unsecured obligation; and,
(b) To the extent that, at such time, the mortgagee or pledgee has parted with money or money's worth, as defined in 830 CMR 62C.50.1(2).
Purchaser, a person who, for adequate and full consideration in money or money's worth acquires an interest (other than a lien or security interest) in property which is valid against subsequent purchasers without actual notice.
Security, any bond, debenture, note or certificate or other evidence of indebtedness issued by any corporation, including one issued by a governmental or political subdivision thereof, with interest coupons or in registered form, share of stock, voting trust certificate, or any certificate of interest or participation in, certificate of deposit or receipt for, temporary or interim certificate for, warrant or right to subscribe to or purchase, any of the foregoing; negotiable instrument; or money.
(a) Scope of Lien. If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount, including any interest, additional amount, addition to tax, assessable penalty or forfeiture together with any costs that may accrue in addition thereto, shall be a lien in favor of the Commonwealth upon all property, or rights to property, whether real or personal, tangible or intangible, belonging to such person. The lien shall also extend to property or rights to property of a trust with respect to tax amounts due from a grantor or other person treated as the owner of a portion of such trust by reason of sections 671-678 of the Code and to property or rights to property of a disregarded entity with regard to tax amounts due from the owner of the entity. The lien may also extend to property owned by a taxpayer even though a third person holds legal title.
(b) Duration of Lien. The lien shall arise at the time the assessment is made or deemed to be made and shall continue to attach to all property and rights to property, including property acquired after the lien arises, belonging to such person at any time during the period of the lien until:
1. the liability for the amount assessed or deemed to be assessed is satisfied;
2. a judgment against the taxpayer arising out of such liability is satisfied; or
3. any such liability or judgment becomes unenforceable by reason of lapse of time within the meaning of section 6322 of the Code. A Massachusetts notice of tax lien in favor of the Commonwealth recorded on a date making it less than six years old as of January 1, 2005, if not sooner discharged as a result of payment of the tax, remains in full force and effect fori. a period of ten years after the date of assessment, deemed assessment or self-assessment of the tax; or
ii. for such longer period of time as permitted by section 6322 of the Code, in effect and as amended from time to time, and as construed or interpreted either by the regulations or other authorities promulgated under section 6322 of the Code by the Internal Revenue Service or by any federal court or United States Tax Court decision.
(c) Extension of Lien. If, by operation of section 6322 of the Code, a tax lien in favor of the Commonwealth would extend beyond its initial or subsequent ten-year period, the Commissioner is authorized to refile the notice of lien. See 830 CMR 62C.50.1(5) for rules governing refiling of liens and the effect of such refilings on the duration of a lien.
(4) Validity of Lien Against Mortgagees, Pledgees, Purchasers, and Judgment Creditors.
(a) Place for Filing Notice of Lien. The lien imposed by M.G.L. c. 62C, § 50 shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice of the lien has been filed by the Commissioner as follows:
1. Real Property and Fixtures. With respect to real property and fixtures, notice shall be filed in the registry of deeds of the county where such property is situated.
2. Personal Property other than Fixtures. With respect to personal property other than fixtures, notice shall be filed in the filing office in which the filing of a financing statement would perfect, under Article 9 of M.G.L. c. 106, an attached non-possessory security interest in tangible personal property belonging to the person liable to pay the tax as if the person were located in Massachusetts under M.G.L. c. 106, § 9-307.
(b) Protection for Certain Interests even though Notice is Filed. Even though notice of a lien has been filed in the manner prescribed in 830 CMR 62C.50.1(4)(a) 2., the lien shall not be valid with respect to a security as against any mortgagee, pledgee, or purchaser of such security, for an adequate and full consideration in money or money's worth, if at the time of such mortgage, pledge, or purchase such mortgagee, pledgee, or purchaser is without actual notice or knowledge of the existence of such lien.
(c) Form of Notice. Notice of Massachusetts tax lien shall be completed and filed in accordance with 830 CMR 62C.50.1(3)(a). Such notice places on public record the following:
1. The document identification number assigned to the notice;
2. The name, address, and partially redacted identification number of the taxpayer;
3. For each assessment listed, the type of tax, the date of the assessment, and the amount of assessment outstanding at the time of the notice;
4. The name of the recording office in which the notice is filed; and
5. The signature of the Commissioner or the signature and title of the Commissioner's duly authorized representative.
The filing of a notice of lien or of a waiver or release of lien shall be received and registered or recorded without payment of any fee.
(5) Refiling of Notice of Tax Lien.
(a) General. If, by operation of section 6322 of the Code, a tax lien in favor of the Commonwealth would extend beyond its initial or subsequent 10-year period, the Commissioner is authorized to refile the notice of the tax lien. In such cases, the lien must be refiled during the required refiling period set forth in 830 CMR 62C.50.1(5)(c) in the same office or registry in which the lien was originally filed. Notice of the refiling of the lien will be mailed to the last known address. A refiled lien will terminate upon satisfaction of the outstanding liability, or not later than twenty years from the date when the assessment to which it relates was made or deemed to be made. A lien that is again refiled in any subsequent required refiling period is extended for an additional ten years beyond the expiration of the previous refiling period.
(b) Effect of Refiling a Notice of Tax Lien. A properly refiled notice of lien that is refiled within the "required refiling period", as that phrase is defined in 830 CMR 62C.50.1(5)(c) is effective from the date on which the notice of lien to which it relates was effective. A refiled notice of tax lien that is either improperly filed or not refiled within the required refiling period is effective only from the date of refiling of the notice.
Until refiling of the notice of tax lien by the Commissioner, the lien shall not be valid as against any mortgagee, pledgee, purchaser or judgment creditor, even if the interest of such mortgagee, pledgee, purchaser or judgment creditor was at some previous time junior to the tax lien of the Commonwealth.
(c) Required Refiling Period. The phrase "required refiling period" means:
1. the one-year period ending 30 days after the expiration of 10 years after the date of the assessment of the tax, and
2. the one-year period ending with the expiration of 10 years after the close of the preceding required refiling period for such notice of lien.
(d) Effect of Failure to Refile Notice of Tax Lien. If the Commissioner fails to refile a notice of tax lien in the time and manner set forth in 830 CMR 62C.50.1(5), the notice is not effective, after the expiration of the required refiling period set forth in 830 CMR 62C.50.1(5)(c), as against any person without regard to when the interest of the person in the property subject to the lien was acquired. However, the failure of the Commissioner to refile a Notice of Tax Lien during the required refiling period will not, following the expiration of the refiling period, affect the effectiveness of the notice with respect to:
1. property which is the subject matter of a suit to which the Commonwealth is a party, commenced prior to the expiration of the required refiling period, or
2. property which has been levied upon by the Commissioner prior to the expiration of the refiling period.
However, if a suit or levy referred to in the preceding sentence is dismissed or released and the property is subject to the lien at such time, a Notice of Tax Lien with respect to the property is not effective until after the suit or the levy is dismissed or released unless refiled during the required refiling period. Failure to refile a notice of tax lien does not affect the existence of the lien.
(e) Filing of a New Notice. If a notice of tax lien is not refiled, and if the lien remains in existence, the Commissioner may nevertheless file a new Notice of Tax Lien. This new filing must meet the requirements of 830 CMR 62C.50.1 and is effective from the date on which such filing is made.
(6) Release of Lien.
(a) When Commissioner may issue a Certificate of Release of Tax Lien. The Commissioner may issue a Certificate of Release of Tax Lien imposed with respect to any Massachusetts tax if the Commissioner finds that any of the following conditions exist:
1. the liability for the amount assessed or deemed to be assessed, together with any interest and penalties which have accrued, is fully satisfied by the payment of such amounts;
2. a judgment against the taxpayer arising out of such liability is satisfied;
3. the taxpayer furnishes and the Commissioner accepts a bond, conditioned on payment of the amount assessed and any interest and penalties assessed thereon within an agreed period of time; or
4. the liability or judgment becomes unenforceable as a matter of law (and not merely uncollectible or unenforceable as a matter of fact) by reason of lapse of time within the meaning of section 6322 of the Code. In all cases liability for the payment of the tax continues until the satisfaction of the tax in full or until the expiration of the statutory period for collection, including such extension of the period for collection as may be agreed upon in writing by the taxpayer and the Commissioner.
(b) Effect of Certificate of Release. Except as otherwise provided in 830 CMR 62C.50.1(8) with respect to revocation of a certificate of release and reinstatement of a tax lien, if a notice of tax lien contains a certificate of release that automatically becomes effective on the date prescribed in the notice, (e.g. the date on which the required refiling period ends) the certificate of release shall be conclusive evidence that the tax lien upon the property covered by the certificate is extinguished as of that date. See Treas. Reg. § 301.6325-1(a); § 301.6325-1(f)(1); Treas. Reg. § 301.6323(g)-1(a)(4).
(7) Partial Release of Lien: Certificate of Subordination.
The Commissioner may issue a release of lien as to a part of the property subject to a tax lien, provided that the Commissioner is satisfied that such partial release will facilitate the collection of the outstanding tax liability. An application for a partial release shall be submitted to the Commissioner in writing and shall include the following:
(a) an identifying description, including address, of all real property subject to the lien, giving appropriate title references and the location and an identifying description of all personal property subject to the lien, including, where appropriate, the name of the manufacturer and model number of the item, the office in which any encumbrances on such property are recorded;
(b) the address and a full legal description of any real property sought to be released; and the location and a full identifying description, as in 830 CMR 62C.50.1(7)(a) of any personal property sought to be released;
(c) a statement of the fair market value of each property subject to the lien, including the property sought to be released;
(d) a statement of the reasons for which the taxpayer seeks the release;
(e) a statement of all encumbrances on the property, including the property sought to be released, and the dates of their recording, where applicable;
(f) a statement of the consideration offered by the taxpayer for the partial release; and,
(g) a copy of the notice of a tax lien.
In considering an application for a partial release of a lien, the Commissioner may require further evidence or documentation, such as a supporting appraisal of the property. As a general guideline, a partial release will not be issued unless the fair market value of the property which would remain subject to the tax lien after issuance of a partial release, is at least double the amount of the unsatisfied liability secured by the tax lien and of the amount of all other liens on the property which have priority to such tax lien.
Taxpayer T has an unsatisfied tax liability of $10,000, and three parcels of real estate subject to the lien: Whiteacre, Blackacre and Greenacre. The fair market value of Whiteacre is $20,000, but there is a mortgage of $10,000 (including interest) which is prior to the tax lien of Whiteacre. Blackacre has a fair market value of $10,000, but there is a mortgage of $3,000 (including interest) which is prior to Blackacre. Greenacre has a fair market value of $5,000, and is unencumbered except for the tax lien. T seeks a partial release of the lien, to free Greenacre for sale. T offers the Commissioner $5,000 as consideration for such partial release, which would reduce his unpaid tax liability to $5,000. If the partial release were issued, the fair market value of the property remaining subject to the lien would be $30,000. However, the prior liens and the unsatisfied tax liability total $18,000. Since the fair market value of the property remaining subject to the lien is not at least double this total, the application fails to meet the criterion, and would not be likely to be granted.
A release of lien as to a part of the property subject to the tax lien of the Commonwealth may be issued, if such part is sold at a foreclosure sale, and, a written agreement is made with the Commissioner by the parties in interest which provides that the proceeds be held as a fund subject to the liens and interests which attached to the property to be released. The liens and interests shall have the same order and priority with respect to the proceeds of sale as they had with respect to the property. In order for the provisions of this paragraph to apply, the sale must divest the taxpayer of all rights, title and interest in the property sought to be released.
In appropriate circumstances, the Commissioner may certify that the tax lien as to some part of the property subject to the tax lien is subordinate to a lien or interest held by another party, if there is paid to the Commissioner an amount equal to the amount of the lien or interest to which the tax lien is made subordinate. If the certificate of subordination is to be issued before such amount is paid over to the Commissioner, a separate escrow account must be established in full amount, to secure the tax lien.
If, after issuance of a partial release or certificate of subordination, the taxpayer reacquires any interest in the property for which such certificate was obtained, the lien will again attach to such property.
(8) Revocation of Certificate of Release of Tax Lien; Reinstatement of Lien.
In certain instances, the Commissioner may revoke a certificate of release of tax lien and re-instate the tax lien if the Commissioner determines that:
a. a certificate of release was issued erroneously or improvidently;
b. a certificate of release of such lien was issued in connection with a compromise agreement made pursuant to M.G.L. c. 62C, §§ 37A, 37B, or 37C which has been breached; or
c. the period of limitations on collection after the assessment of the tax liability has not expired.
(a) Method of Revocation and Reinstatement. The method of revocation and reinstatement is accomplished by mailing notice of the revocation to the taxpayer's last known address, and by filing notice of the revocation of the certificate in the same office in which the notice of lien to which it relates has been filed.
(b) Effect of Reinstated Lien. A tax lien reinstated in accordance with 830 CMR 62C.50.1(8) is effective on or after the date the notice of revocation is mailed to the taxpayer at this last known address, but the reinstated lien is not effective before the filing of the notice of revocation of the certificate in the same office in which the notice of lien tax which if relates was filed (if the notice of lien has been filed.) As of the effective date of reinstatement, a reinstated tax lien has the same force and effect as the lien which arose upon the assessment of liability. The reinstated lien continues in existence until the expiration of the period of limitations on collection after the assessment of the tax liability to which it relates. The reinstatement of the lien does not retroactively reinstate a previously filed notice of lien. The reinstated lien is not valid against any holder of a lien or interest described in 830 CMR 62C.50.1 until notice of the reinstated lien has been filed in accordance with the provisions of 830 CMR 62C.50.1 subsequent to or concurrent with the time the reinstated lien became effective.
830 CMR 62C.50.1: M.G.L. c. 14, § 6(1); M.G.L. c. 62C, § 3; M.G.L. c. 62C, § 50
Date of Promulgation: 1/22/10