IRS Form 668-H: Notice of Federal Estate Tax Lien Under Section 6324B

Form 668-H, Notice of Federal Estate Tax Lien Under Internal Revenue Code Section 6324B, is filed when an estate elects special-use valuation under IRC Section 2032A. That election lets qualifying farm or closely held business real estate be valued for estate tax purposes at its actual use value instead of its highest and best use. The tax savings can be substantial. Form 668-H is the security the IRS takes in exchange.

What It Secures

The special-use election comes with a recapture rule. If the qualified heirs sell the property to an outsider or stop using it for the qualified purpose within the recapture period, the estate tax savings are clawed back as additional estate tax, reported on Form 706-A. Form 668-H is filed on the property that qualified for the election to secure that potential recapture tax. The qualified heirs are named on the form because they are personally liable for any recapture tax that is triggered.

No CDP or CAP Rights

Because the lien arises from an election the estate chose to make, IRM 5.5.8 treats it as consensual. There are no Collection Due Process or Collection Appeals Program rights attached to the filing. That is not a defect in the notice. It is how this lien works.

No Expiration Date on the Notice

Form 668-H does not show an expiration or refiling date. The lien stays in place until the recapture period ends without a triggering event, or until any recapture tax is paid or becomes unenforceable. If recapture is triggered, the lien can remain well past the original period.

Selling, Borrowing, or Changing Use

If the heirs need to sell part of the property, take it out of special use, or borrow against it, the lien gets in the way. Discharge and subordination are both available, but each requires an application and a showing that the government's interest is protected. Plan these transactions with the lien in mind, and before triggering recapture by accident.

The general federal estate tax lien under IRC Section 6324(a), which attaches automatically to a decedent's gross estate for ten years, is a separate lien. Form 668-J covers the separate lien for estate tax deferred under IRC Section 6166.

If a Form 668-H is recorded against family property and you need to sell, refinance, or change how it is used, call us at (813) 229-7100.