The Uneasy Case against Tax Lien Subordination

41 Pages Posted: 19 Mar 2014 Last revised: 8 Aug 2014

See all articles by Shu-Yi Oei

Shu-Yi Oei

Boston College Law School

Date Written: March 18, 2014


I.R.C. § 6323, which governs how the federal tax lien ranks against the interests of the taxpayer’s other creditors, subordinates the tax lien to the claims of other creditors in various ways. Tax lien subordination is commonly justified on the grounds that it enhances taxpayer asset value, facilitates commercial transactions, and reduces monitoring costs for private creditors. This short symposium essay argues, however, that these benefits may be illusory. Tax lien subordination may, in fact, be unnecessarily costly and distortive and may lead to unfair distributive results. This essay suggests that the tax lien priority scheme might be made less costly by reducing its multiple levels of subordination. This could be accomplished in two ways: First, by reducing the magnitude or number of the superpriorities and other prioritized interests; and second, by eliminating the priority of the four horsemen over the un-noticed federal tax lien, or, alternatively, by moving away from a system of pure public notice and toward a semi-private inquiry-based system.

Keywords: Tax, Tax Policy, Tax Procedure, Tax Administration Tax Liens, Article 9, Uniform Commercial Code, Secured Credit

JEL Classification: E62, H20, H21, H22, H23, H24. H25, H26, H29

Suggested Citation

Oei, Shu-Yi, The Uneasy Case against Tax Lien Subordination (March 18, 2014). Pittsburgh Tax Review, Vol. 11, No. 2, 2014, Tulane Public Law Research Paper No. 14-4, Available at SSRN:

Shu-Yi Oei (Contact Author)

Boston College Law School ( email )

885 Centre Street
Newton, MA 02459-1163
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics