TC 360: Fees and Collection Costs Assessed

By Forrest Baumhover, CFP®, EA · Last verified August 18, 2026

TC 360 adds the IRS’s own out-of-pocket lien and collection costs to a client’s balance — a fourth kind of charge on the account that is neither tax, penalty, nor interest, and that a discharged liability does not automatically erase.

What the code actually does — and a citation correction

TC 360 assesses collection-related fees and costs to a module (the IRS’s record for one tax period within the account) — most commonly the Notice of Federal Tax Lien (NFTL) recording fee, but also levy and sale costs the IRS incurs collecting from a specific asset. Per IRM 5.12.1.17, the NFTL Filing Process table lists the recording fee (plus the current release fee) as posting via TC 360 to "[the] module on NFTL with oldest assessment."

A navigation note: this subsection’s own title is "Summary of NFTL Filing Process." Two levels of parent heading sit above it — "Lien Program Overview" names section 5.12.1, and "Federal Tax Liens" names the Part 5.12 chapter as a whole — and neither of those broader titles appears on 5.12.1.17 itself. A practitioner who searches the IRM by either parent title looking for the fee mechanics will land above the actual table and should drill into 5.12.1.17 specifically.

The broader mechanism — beyond just lien fees

TC 360 is not limited to NFTL recording fees. IRM 5.1.2.6.2 describes the same code posting alongside TC 694 for levy sale and administrative costs — the actual expenses the IRS incurs seizing and selling property, distinct from the lien fee. Both uses share the same accounting logic: TC 360 records that the government spent money pursuing collection, and that expense becomes part of what the taxpayer owes.

Why this matters even after the underlying tax is resolved

Zeroing out the tax doesn’t zero out the fee. IRM 5.12.3.5.6 states directly that "[w]hen an adjustment is made to a module to reduce the tax liability to zero, the taxpayer may still be liable for the fee assessed to the account for the filing of the NFTL." The fee is a separate charge for a service the government already performed — filing the lien — and reducing the tax it was securing does not, on its own, retroactively make the filing unnecessary. A client who successfully fights the underlying assessment down to zero can still open the mail to find the lien-filing fee standing on its own, unexplained by anything in the audit or abatement letter that resolved the tax itself.

The practitioner’s actual next step

Confirm the fee is tied to an actual, documented collection action — an NFTL the IRS genuinely filed, or a levy/sale that genuinely occurred — before assuming it is routine. Pull the account transcript and check for a corresponding TC 582 (lien indicator) or levy action; question a TC 360 with no such action behind it.

If the IRS abated the underlying tax because the liabilities were not the result of the taxpayer’s action or inaction with respect to the law, IRM 5.12.3.5.6 directs the IRS to abate TC 360 too — a materially different scenario from a tax reduction to zero for an unrelated reason. Request that abatement the way TC 361 describes: put it in writing, cite IRM 5.12.3.5.6 and the underlying tax abatement, and follow the procedure IRM 5.1.15, Abatements, Reconsiderations and Adjustments, sets out — 5.12.3.5.6 itself points there rather than naming a specific office.

Watch for a TC 694 posting alongside the 360 — that pairing signals levy/sale costs rather than a lien fee, a materially larger and more consequential category to explain to a client than a routine recording fee.

What TC 360 gets confused with

Practitioners often lump TC 360 in with penalty transaction codes because both increase the balance beyond the original tax. They are not the same thing. A penalty (codes in the 2XX series) is a statutory sanction for noncompliance — late filing, late payment, accuracy. TC 360 is a cost-recovery charge for an actual expense the IRS incurred, with no penalty component and no separate reasonable-cause relief standard of its own. Arguing "the client had reasonable cause" against a TC 360 fee is arguing the wrong standard; the better argument, where available, is that the fee never should have posted in the first place.