Section 16.12 Priority Vis-à-Vis Other Creditor Interests

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

D. (§16.12) Priority Vis-à-Vis Other Creditor Interests

Under general judicial principles, the priority of one lien over another is determined under the “first in time, first in right” doctrine. See, e.g., United States ex rel. IRS v. McDermott, 507 U.S. 447, 449 (1993). Accordingly, even an unperfected tax lien will take priority over other liens that arise later in time.

But this general principle has been eroded by several statutory provisions that grant priority to subsequently arising liens if the tax lien that arose first in time is not properly filed or perfected. I.R.C. § 6323(a). The four categories of interests that take priority over an unfiled tax lien are as follows:

Purchasers Security interest holders Mechanics lienors Judgment...