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7 R.I. Bar J. 1 (1958-1959)

handle is hein.barjournals/ribj0007 and id is 1 raw text is: VOL. VII, No. 1 ADMINISTRATIVE DISCHARGE OR RELEASE OF PROPERTY SUBJECT TO FEDERAL TAX LIENS The tremendous increase in the nutnber of foreclosure suits in which the United States must be named a party, pursuant to Section 2410, Title 28, United States Code, in order to eliminate the federal tax lien, has caused much con- cern to the members of the Bar as well as officials of the Government. Section 6325(b) (2) of the Internal Revenue Code of 1954 was enacted for the purpose of avoiding in many of these actions the necessity of naming the United States as a defendant, thus minimizing the expenditure of both time and money in such actions. This Section permits the Secretary of the Treasury, or his dele- gate, to issue a certificate of discharge of any part of the property subject to the federal tax lien (1) if there is paid to the Secretary, or his delegate, an amount not less than the value of the Government's interest in the property, or (2) if the Secretary, or his delegate determines the interest of the Govern- ment has no value. The benefits to be gained by obtaining an administrative discharge instead of naming the United States as defendant OCTOBER, 1958 in a foreclosure action are readily ap- parent. If the lien is discharged ad- ministratively: (a) The mortgagee may resort to the terms of the mortgage to foreclose or may follow state procedures, without strict compliance with the judicial sales requirement of Section 2410. (b) The one-year right of redemption provided for the United States after a foreclosure sale is eliminated. This right of redemption frequently deters bidders and reduces in amount any bid which is submitted. (c) There will not be any future liti- gation, by appeal or otherwise, with re- spect to the federal tax lien and the property involved. The form for applying for discharge of property from federal tax liens may be obtained from the local office of the Dis- trict Director of Internal Revenue. While at first glance the form may ap- pear long and involved, the information reqiured should be in the possession of the attorney before he could bring a foreclosure suit. The procedure established by Section 6325 (b) (2) is not available once a foreclosure suit has been commenced or there has been a sale pursuant to a fore- closure. This is because once a suit is commenced the jurisdiction over the 0 Social Hour and Dinner-6:00 P. M. SUBSCRIPTION $1.00 Annually Published Monthly October through June f . Providence Journal William H. Edwards, Esq., President- Elect of the Rhode Island Bar Associa- tion, takes office at the annual meeting on October 20, 1958. subject matter is acquired by the At- torney General. Although a few dis- charges have been issued after the com- mencement of a suit, it has been done only with the approval of the Attorney General. To obtain this approval neces- sarily requires additional time which is not involved if the discharge is request- ed prior to the institution of the fore- closure proceedings. IMPORTANT NOTICE The Bar Association has been noti- fied by the insurance company that the Group Professional Liability Policy has been cancelled. The in- surance company reported that only approximately 100 members of the Bar Association had signed up and that this number was insufficient for it to keep the policy in force. Individual lawyers who had been covered by this Group Policy should take steps to obtain this insurance coverage elsewhere on an individual basis. Edward P. Smith, our Executive Secretary, can be contacted for the names of several insurance compan- ies which carry this type of policy. ANNUAL MEETING of the RHODE ISLAND BAR ASSOCIATION Monday, October 20, 1958 NARRAGANSETT HOTEL Institute on Uniform Commercial Code - Walter D. Malcolm, Esq. of the Boston Bar, speaker - 2 - 4 P. M. * Business Meeting-4:30 P. M. .-W

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