Lands transferred by gift become subject, immediately and without notice, to a lien for such Gift Tax as may be found due from the donor in respect to all gifts made by him during the calendar year in which such gift was made.
Real Property of a donor, is free of the Federal Special Gift Tax Lien:
- Ten (10) years after the gift in any case, and sooner;
- If (a) the gift tax return is filed, (b) the unified credit is sufficient to cover the non-exempt portion of the gift, and (c) the credit is claimed for the property, or the gift tax is paid; or
- When the IRS issues, pursuant to IRC §6325, a certificate of discharge of the real property, or a certificate of release or non-attachment of the lien; or
- If there is a transfer to a purchaser or holder of a security interest where the lien is divested under IRC §6324(b). See IRC §6323(h).
Comment 1. The Federal Special Gift Tax Lien, like the Federal Special Estate Tax Lien is a secret lien. The making of the gift alone triggers the creation of the lien, and there is no statutory requirement for filing of notice of lien.
In addition to the Federal Special Estate Tax Lien and the Federal Special Gift Tax Lien, there may also arise a general federal tax lien against the same property for the same tax; these liens can exist simultaneously. However, the general federal tax lien can arise only after the gift tax becomes due, and then only following assessment, demand, and refusal or neglect to pay, and finally, by filing the notice of lien.
Comment 2. Any particular gift in a calendar year becomes liable for the tax on all gifts made during that particular year. The donee of a gift shall be personally liable for such tax to the extent of the value of such gift.
Property received by way of a gift and transferred by the donee (or by transferee of the donee) to a purchaser or holder of a security interest is automatically divested of the gift tax lien. (See IRC §6324[b]). The lien then shifts to all other property of the donee, even including after acquired property.
Comment 3. Under IRC §6324(c)(1) mechanics’ liens, real property tax liens, special assessment liens and liens for charges for utilities or public services furnished by a governmental entity have priority over the Federal Special Gift Tax Lien.
September 26, 2008: This standard was added.