Current through Register 1531, September 27, 2024
(1)
Statement of Purpose; Effective Date; Outline of
Topics.
(a)
Statement
of Purpose. 830 CMR 62C.50.1 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 §
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.
830 CMR 62C.50.1 is effective January 22, 2010.
(c)
Outline of
Topics. 830 CMR 62C.50.1 is organized as follows:
1. Statement of Purpose; Effective Date;
Outline of Topics
2.
Definitions
3. General
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.
(3)
General.
(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 §§ 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 § 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 for
a. a period of ten years after
the date of assessment, deemed assessment or self-assessment of the tax;
or
b. for such longer period of time
as permitted by § 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 § 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 § 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 § 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 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 20 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 ten years after the date of the
assessment of the tax; and
2. the
one-year period ending with the expiration of ten 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 § 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.
Example:
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 certificate of release was issued erroneously
or improvidently; 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 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.
