Title 26 — Internal Revenue Code
Chapter 76 — Judicial Proceedings
§ 7425. Discharge of liens
Statutory text
Judicial proceedings
If the United States is not joined as a party, a judgment in any civil action or suit described in subsection (a) of section 2410 of title 28 of the United States Code, or a judicial sale pursuant to such a judgment, with respect to property on which the United States has or claims a lien under the provisions of this title—
shall be made subject to and without disturbing the lien of the United States, if notice of such lien has been filed in the place provided by law for such filing at the time such action or suit is commenced, or
shall have the same effect with respect to the discharge or divestment of such lien of the United States as may be provided with respect to such matters by the local law of the place where such property is situated, if no notice of such lien has been filed in the place provided by law for such filing at the time such action or suit is commenced or if the law makes no provision for such filing.
If a judicial sale of property pursuant to a judgment in any civil action or suit to which the United States is not a party discharges a lien of the United States arising under the provisions of this title, the United States may claim, with the same priority as its lien had against the property sold, the proceeds (exclusive of costs) of such sale at any time before the distribution of such proceeds is ordered.
Other sales
Notwithstanding subsection (a) a sale of property on which the United States has or claims a lien, or a title derived from enforcement of a lien, under the provisions of this title, made pursuant to an instrument creating a lien on such property, pursuant to a confession of judgment on the obligation secured by such an instrument, or pursuant to a nonjudicial sale under a statutory lien on such property—
shall, except as otherwise provided, be made subject to and without disturbing such lien or title, if notice of such lien was filed or such title recorded in the place provided by law for such filing or recording more than 30 days before such sale and the United States is not given notice of such sale in the manner prescribed in subsection (c)(1); or
shall have the same effect with respect to the discharge or divestment of such lien or such title of the United States, as may be provided with respect to such matters by the local law of the place where such property is situated, if—
notice of such lien or such title was not filed or recorded in the place provided by law for such filing more than 30 days before such sale,
the law makes no provision for such filing, or
notice of such sale is given in the manner prescribed in subsection (c)(1).
Special rules
Notice of sale
Notice of a sale to which subsection (b) applies shall be given (in accordance with regulations prescribed by the Secretary) in writing, by registered or certified mail or by personal service, not less than 25 days prior to such sale, to the Secretary.
Consent to sale
Notwithstanding the notice requirement of subsection (b)(2)(C), a sale described in subsection (b) of property shall discharge or divest such property of the lien or title of the United States if the United States consents to the sale of such property free of such lien or title.
Sale of perishable goods
Notwithstanding the notice requirement of subsection (b)(2)(C), a sale described in subsection (b) of property liable to perish or become greatly reduced in price or value by keeping, or which cannot be kept without great expense, shall discharge or divest such property of the lien or title of the United States if notice of such sale is given (in accordance with regulations prescribed by the Secretary) in writing, by registered or certified mail or by personal service, to the Secretary before such sale. The proceeds (exclusive of costs) of such sale shall be held as a fund subject to the liens and claims of the United States, in the same manner and with the same priority as such liens and claims had with respect to the property sold, for not less than 30 days after the date of such sale.
Forfeitures of land sales contracts
For purposes of subsection (b), a sale of property includes any forfeiture of a land sales contract.
Redemption by United States
Right to redeem
In the case of a sale of real property to which subsection (b) applies to satisfy a lien prior to that of the United States, the Secretary may redeem such property within the period of 120 days from the date of such sale or the period allowable for redemption under local law, whichever is longer.
Amount to be paid
In any case in which the United States redeems real property pursuant to paragraph (1), the amount to be paid for such property shall be the amount prescribed by subsection (d) of section 2410 of title 28 of the United States Code.
Certificate of redemption
In general
In any case in which real property is redeemed by the United States pursuant to this subsection, the Secretary shall apply to the officer designated by local law, if any, for the documents necessary to evidence the fact of redemption and to record title to such property in the name of the United States. If no such officer is designated by local law or if such officer fails to issue such documents, the Secretary shall execute a certificate of redemption therefor.
Filing
The Secretary shall, without delay, cause such documents or certificate to be duly recorded in the proper registry of deeds. If the State in which the real property redeemed by the United States is situated has not by law designated an office in which such certificate may be recorded, the Secretary shall file such certificate in the office of the clerk of the United States district court for the judicial district in which such property is situated.
Effect
A certificate of redemption executed by the Secretary shall constitute prima facie evidence of the regularity of such redemption and shall, when recorded, transfer to the United States all the rights, title, and interest in and to such property acquired by the person from whom the United States redeems such property by virtue of the sale of such property.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Federal Tax Lien Act of 1966
Pub. L. 89–719 title I § 109 · 80 Stat. 1125
Enacted · 26 U.S.C. § 7425
Added Pub. L. 89–719, title I, § 109, Nov. 2, 1966, 80 Stat. 1141
Source evidence
Code source credit
Added Pub. L. 89–719, title I, § 109, Nov. 2, 1966, 80 Stat. 1141Enacted provision · exact public law section
SEC. 109. DISCHARGE OF LIENS HELD BY UNITED STATES. Subchapter B of chapter 76 (relating to proceedings by taxpayers) 68A Stat. 876. 26 USC 7421–7425. is amended by redesignating section 7425 as section 7427 and by inserting after section 7424 the following new section: “SEC. 7425. DISCHARGE OF LIENS. “(a) Judicial Proceedings.— If the United States is not joined as a party, a judgment in any civil action or suit described in subsection (a) of section 2410 of title 28 of the United States Code, or a Post, p. 1147. judicial sale pursuant to such a judgment, with respect to property on which the United States has or claims a lien under the provisions of this title— “(1) shall be made subject to and without disturbing the lien of the United States, if notice of such lien has been filed in the place provided by law for such filing at the time such action or suit is commenced, or “(2) shall have the same effect with respect to the discharge or divestment of such lien of the United States as may be provided with respect to such matters by the local law of the place where such property is situated, if no notice of such lien has been filed in the place provided by law for such filing at the time such action or suit is commenced or if the law makes no provision for such filing. If a judicial sale of property pursuant to a judgment in any civil action or suit to which the United States is not a party discharges a lien of the United States arising under the provisions of this title, the United States may claim, with the same priority as its lien had against the property sold, the proceeds (exclusive of costs) of such sale at any time before the distribution of such proceeds is ordered. “(b) Other Sales.— Notwithstanding subsection (a) a sale of property on which the United States has or claims a lien, or a title derived from enforcement of a lien, under the provisions of this title, made pursuant to an instrument creating a lien on such property, pursuant to a confession of judgment on the obligation secured by such an instrument, or pursuant to a nonjudicial sale under a statutory lien on such property— “(1) shall, except as otherwise provided, be made subject to and without disturbing such lien or title, if notice of such lien was filed or such title recorded in the place provided by law for such filing or recording more than 30 days before such sale and the United States is not given notice of such sale in the manner prescribed in subsection (c) (1); or “(2) shall have the same effect with respect to the discharge or divestment of such lien or such title of the United States, as may be provided with respect to such matters by the local law of the place where such property is situated, if— “(A) notice of such lien or such title was not filed or recorded in the place provided by law for such filing more than 30 days before such sale, “(B) the law makes no provision for such filing, or “(C) notice of such sale is given in the manner prescribed in subsection (c) (1). “(c) Special Rules.— “(1) Notice of sale.— Notice of a sale to which subsection (b) applies shall be given (in accordance with regulations prescribed by the Secretary or his delegate) in writing, by registered or certified mail or by personal service, not less than 25 days prior to such sale, to the Secretary or his delegate. “(2) Consent to sale.— Notwithstanding the notice requirement of subsection (b) (2) (C), a sale described in subsection (b) of property shall discharge or divest such property of the lien or title of the United States if the United States consents to the sale of such property free of such lien or title. “(3) Sale of perishable goods.— Notwithstanding the notice requirement of subsection (b) (2) (C), a sale described in subsection (b) of property liable to perish or become greatly reduced in price or value by keeping, or which cannot be kept without great expense, shall discharge or divest such property of the lien or title of the United States if notice of such sale is given (in accordance with regulations prescribed by the Secretary or his delegate) in writing, by registered or certified mail or by personal service, to the Secretary or his delegate before such sale. The proceeds (exclusive of costs) of such sale shall be held as a fund subject to the liens and claims of the United States, in the same manner and with the same priority as such liens and claims had with respect to the property sold, for not less than 30 days after the date of such sale. “(d) Redemption by United States.— “(1) Right to redeem.— In the case of a sale of real property to which subsection (b) applies to satisfy a lien prior to that of the United States, the Secretary or his delegate may redeem such property within the period of 120 days from the date of such sale or the period allowable for redemption under local law, whichever is longer. “(2) Amount to be paid.— In any case in which the United States redeems real property pursuant to paragraph (1), the amount to be paid for such property shall be the amount prescribed by subsection (d) of section 2410 of title 28 of the United States Code. “(3) Certificate of redemption.— “(A) In general.— In any case in which real property is redeemed by the United States pursuant to this subsection, the Secretary or his delegate shall apply to the officer designated by local law, if any, for the documents necessary to evidence the fact of redemption and to record title to such property in the name of the United States. If no such officer is designated by local law or if such officer fails to issue such documents, the Secretary or his delegate shall execute a certificate of redemption therefor. “(B) Filing.— The Secretary or his delegate shall, without delay, cause such documents or certificate to be duly recorded in the proper registry of deeds. If the State in which the real property redeemed by the United States is situated has not by law designated an office in which such certificate may be recorded, the Secretary or his delegate shall file such certificate in the office of the clerk of the United States district court for the judicial district in which such property is situated. “(C) Effect.— A certificate of redemption executed by the Secretary or his delegate shall constitute prima facie evidence of the regularity of such redemption and shall, when recorded, transfer to the United States all the rights, title, and interest in and to such property acquired by the person from whom the United States redeems such property by virtue of the sale of such property.”Pub. L. 94–455 title XIX § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 7425
Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing
Source evidence
Code amendment note
Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.Tax Reform Act of 1986
Pub. L. 99–514 title XV § 1572(a) · 100 Stat. 2085
Added · 26 U.S.C. § 7425(c)(4)
Pub. L. 99–514 added par. (4)
Source evidence
Code amendment note
Subsec. (c)(4). Pub. L. 99–514 added par. (4).Enacted provision · exact public law section
(a) Amendment of Section 7425(c).— Subsection (c) of section 7425 (relating to special rules for discharge of liens) is amended by adding at the end thereof the following new paragraph: “(4) Forfeitures of land sales contracts.— For purposes of subsection (b), a sale of property includes any forfeiture of a land sales contract.”Effective date note
Pub. L. 99–514, title XV, § 1572(b), Oct. 22, 1986, 100 Stat. 2765, provided that: “The amendment made by subsection (a) [amending this section] shall apply to forfeitures after the 30th day after the date of the enactment of this Act [Oct. 22, 1986].”
3 of 3 references resolved to an enrolled provision
Editorial Notes
Prior Provisions
A prior section 7425 was renumbered 7434 of this title.
Amendments1976–1986 · 2 rounds
1986
Subsec. (c)(4). Pub. L. 99–514 added par. (4).
1976
Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Pub. L. 99–514, title XV, § 1572(b), , 100 Stat. 2765, provided that: “The amendment made by subsection (a) [amending this section] shall apply to forfeitures after the 30th day after the date of the enactment of this Act [].”
Effective Date
Section applicable after , regardless of when title or lien of United States arose or when lien or interest of another person was acquired, with certain exceptions, see section 114(a)–(c) of Pub. L. 89–719, set out as an Effective Date of 1966 Amendment note under section 6323 of this title.
Credits
1966–1986 · 3 acts
- 1966Added Pub. L. 89–719, title I, § 109, , 80 Stat. 1141
- 1976amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), , 90 Stat. 1834
- 1986Pub. L. 99–514, title XV, § 1572(a), , 100 Stat. 2765.
Show as published
(Added Pub. L. 89–719, title I, § 109, , 80 Stat. 1141; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), , 90 Stat. 1834; Pub. L. 99–514, title XV, § 1572(a), , 100 Stat. 2765.)