8.6 Priority of the Federal Tax Lien

• Library: Enforcement of Liens and Judgments in Virginia (Virginia CLE) (2019 Ed.)

8.6 PRIORITY OF THE FEDERAL TAX LIEN

The basic rule for determining priority of liens, as stated in United States v. City of New Britain, ⁵³ is "first in time, first in right." As discussed above, the federal tax lien arises on the date of assessment once the taxpayer fails to pay after notice and demand. Before another lien can compete with the federal tax lien, it must be choate or accorded one of the priority positions in I.R.C. § 6323. A choate lien is one that is specific and perfected. "Specific" means that the lien attaches to specific property or property rights of the taxpayer the quantum of which is certain. "Perfected" means that nothing more need be, or can be, done by the lien claimant to perfect the lien.

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In City of New Britain, the Supreme Court set forth three attributes...