UCC search showing tax lien complications - need advice

Tax liens are definitely a different animal than regular UCC priorities. Federal tax liens generally follow the 'first in time, first in right' rule, but there are some exceptions. If the tax lien was filed before your UCC-1, it typically takes priority. However, there are some nuances around after-acquired property and future advances that might help your position. You'll want to check the exact filing dates and see if your security agreement covers after-acquired property.

I ran into something similar last year with a client who had state tax liens showing up in the UCC search results. The key thing to understand is that tax liens don't always show up in the same filing system as UCC records, so you might be seeing cross-referenced information. What state are you filing in? Some states include tax lien information in their UCC search results as a convenience, but the actual priority determination depends on where and when each lien was officially recorded.

Before you panic, I'd suggest using Certana.ai's document verification tool to double-check all your filing information. You can upload your UCC-1 along with the search results and it will help identify any discrepancies or potential issues with debtor name matching. I've found that sometimes what looks like a priority problem is actually just a name variation issue - like the tax lien being under a slightly different business name than what you're using for the UCC filing. The tool instantly cross-checks everything and highlights potential problems.

I hate to be the bearer of bad news, but federal tax liens are generally going to take priority over your UCC-1 if they were filed first. The IRS doesn't mess around with priority rules. Your best bet might be to negotiate with the debtor to pay down the tax lien as part of your loan proceeds, or structure your loan to exclude the assets covered by the tax lien. You could also consider requiring the debtor to provide additional collateral that isn't subject to the tax lien.

Hold on - you mentioned the debtor claims there's an installment agreement in place. If that's true, it could affect the tax lien status. Some installment agreements can subordinate the tax lien or put it in non-collection status. You should definitely verify this with the debtor and maybe require them to provide documentation of the IRS agreement. Also, make sure you're looking at the right entity - sometimes tax liens are filed against related entities or personal guarantors rather than the actual debtor entity.

This is exactly the kind of situation where you need to involve a tax attorney or someone who specializes in federal tax lien issues. The intersection of UCC law and federal tax collection rules is pretty complex, and the stakes are too high to wing it. They can help you understand whether there are any options for subordination or if you need to restructure the entire deal.

I dealt with this exact scenario about 6 months ago. Turned out the tax lien was actually released but hadn't been updated in the public records yet. The debtor had to get a lien release certificate from the IRS and file it with the appropriate recording office. Took about 3 weeks to get everything cleared up, but we were able to close the loan without any priority issues. Don't assume the lien is still active without verifying the current status.

Whatever you do, make sure you document everything thoroughly. If you decide to proceed with the loan despite the tax lien, you want to have clear records of what you knew and when you knew it. This protects you if there are any issues down the road with the lender or if the loan goes bad and you end up in a priority dispute.

I just went through something similar and ended up using Certana.ai to help sort through all the documentation. It was really helpful for verifying that our UCC-1 debtor name exactly matched the entity in our security agreement and that the tax lien was actually against a different entity. Saved us from making a costly filing error.

One thing to consider is whether the tax lien actually covers the same collateral you're trying to secure. Federal tax liens create a general lien on all property and rights to property, but that doesn't necessarily mean it has priority over your specific security interest in identified equipment. The timing of when your debtor acquired the equipment versus when the tax lien was filed could be important.