§6324A — Title 26 Internal Revenue Code | U.S. Code

Summary

Estates that elect under section 6166 to pay estate tax in installments can give the IRS a lien on specific property as security. The executor makes the election, and every person with an interest in the chosen property signs a written agreement consenting to the lien and naming one agent to deal with the IRS. The property must be expected to last through the deferral period, and the IRS cannot require property worth more than the deferred tax plus the interest payable over the first 4 years of the deferral. The lien arises when the executor is discharged from liability (or earlier, when the IRS files notice) and lasts until the deferred tax is paid or becomes unenforceable. It is not valid against purchasers and certain other creditors until the IRS files notice. If the property's value drops below what is still owed, the IRS can demand more property or security, and failing to provide it within 90 days is treated as accelerating the remaining installments. While this lien is in place, the general estate tax lien does not apply to the same property, and the IRS cannot also require a bond.

Title 26, §6324A

Internal Revenue Code — Source: USLM XML via OLRC

(a)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.

(b)(1)For 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)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—

(A)the deferred amount, and

(B)the required interest amount.

(3)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.

(c)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—

(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)(1)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.

(2)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.

(3)Even though notice of a lien imposed by this section has been filed as provided in paragraph (1), such lien shall not be valid—

(A)To the extent provided in section 6323(b)(6).

(B)In the case of any real property subject to a lien for repair or improvement, as against a mechanic’s lienor.

(C)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).

(4)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.

(5)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).

(6)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.

(e)For purposes of this section—

(1)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).

(2)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).

(3)The term “deferral period” means the period for which the payment of tax is deferred pursuant to the election under section 6166.

(4)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.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1981—Pub. L. 97–34, § 422(e)(6)(C), struck out “or 6166A” after “section 6166” in section catchline. Subsecs. (a), (c)(2). Pub. L. 97–34, § 422(e)(6)(A), struck out “or 6166A” after “section 6166”. Subsec. (d)(3), (5). Pub. L. 97–34, § 422(e)(6)(B), struck out “or 6166A(h)” after “section 6166(g)”. Subsec. (e)(1), (3), (4). Pub. L. 97–34, § 422(e)(6)(A), struck out “or 6166A” after “section 6166”. 1978—Subsec. (b)(2)(B). Pub. L. 95–600, § 702(e)(1)(B), substituted “required interest amount” for “aggregate interest amount”. Subsec. (d)(5). Pub. L. 95–600, § 702(e)(1)(C), substituted “required interest amount” for “aggregate interest amount”. Subsec. (e)(2). Pub. L. 95–600, § 702(e)(1)(A), substituted “Required interest amount” for “Aggregate interest amount” in heading and in text “required interest amount”, “over the first 4 years of the deferral period” and “for the payment” for “aggregate interest amount”, “over the deferral period” and “for payment”, respectively. Subsec. (e)(4). Pub. L. 95–600, § 702(e)(1)(D), substituted “required interest amount” for “aggregate interest amount”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1981 AmendmentAmendment by Pub. L. 97–34 applicable to estates of decedents dying after Dec. 31, 1981, see section 422(f)(1) of Pub. L. 97–34, set out as a note under section 6166 of this title.

Effective Date

of 1978 Amendment Pub. L. 95–600, title VII, § 702(e)(2), Nov. 6, 1978, 92 Stat. 2930, provided that: “The

Amendments

made by this section [amending this section] shall apply to the estates of decedents dying after December 31, 1976.”

§6324A Special Lien for Estate Tax Deferred Under Section 6166

Summary

Title 26, §6324A

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Amendments

Citations & Metadata