Frequently Asked Questions
Who is eligible for the Special Lien for Deferred Estate Tax?
Available to estates electing to defer tax payments under IRC 6166. Requires a written agreement signed by all parties with an interest in the designated lien property.
How does the Special Lien for Deferred Estate Tax work?
Allows an executor to elect a specific lien on designated property in lieu of a general estate tax lien or a costly surety bond when deferring estate taxes under section 6166.
What law authorizes the Special Lien for Deferred Estate Tax?
The Special Lien for Deferred Estate Tax is authorized under IRC §6324A of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §6324A
Source: Internal Revenue Code, Title 26, United States Code
§ 6324A. Special lien for estate tax deferred under section 6166(a) General ruleIn 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.
(b) Section 6166 lien property(1) In generalFor purposes of this section, the term “section 6166 lien property” means interests in real and other property to the extent such interests—(A) can be expected to survive the deferral period, and
(B) are designated in the agreement referred to in subsection (c).
(2) Maximum value of required propertyThe 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—(A) the deferred amount, and
(B) 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.
(3) Partial substitution of bond for lienIf 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.
(c) AgreementThe 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—(1) consenting to the creation of the lien under this section with respect to such property, and
(2) 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.
(d) Special rules(1) Requirement that lien be filedThe 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.
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