12.1 Liens Subject to Extinguishment.

• Jurisdiction: Arizona

Because federal involuntary liens arise under federal law, federal law establishes when these liens arise, their filing requirements, their priority, and their enforcement procedures. In contrast, federal voluntary liens are subject to state law for enforcement, but are often subject to particularized federal enforcement rules. Arizona has adopted the Uniform Federal Lien Registration Act, A.R.S. § 33-1031 et seq., integrating the filing of Federal Liens into the state recording system.

Federal tax liens that are junior can be discharged by operation of law through foreclosure. Junior federal tax liens are those arising under 26 U.S.C. § 6321 of the Internal Revenue Code (“general” tax liens for nonpayment of income tax, withholding tax, and social security tax) which were recorded after the recording of a valid security device, mechanic’s lien, or judgment, or which have been subordinated by the Internal Revenue Service. 26 U.S.C. § 6323.

Historically, the priority of federal tax liens was considered to be governed by state real estate law. In Arizona, the priority of liens and interests in real property depended upon the order of recording in the office of the county recorder(s) of the county(ies) in which the property was located (absent knowledge of...