If you owe the IRS a significant tax debt, the agency can place a federal tax lien on your property. This lien gives the IRS legal rights over your assets, making it difficult to sell property or secure financing.
However, in certain cases, the IRS may allow lien subordination, which helps taxpayers manage debt without removing the lien entirely. Here’s what you need to know.
1. What is IRS Lien Subordination?
Lien subordination means the IRS allows another creditor (like a mortgage lender) to take a higher priority over the tax lien. This doesn’t eliminate the lien but can make it easier to:
- Refinance your home.
- Secure a business loan.
- Obtain a mortgage or other financing.
2. When Will the IRS Approve Lien Subordination?
The IRS considers lien subordination in two cases:
- It helps the IRS collect debt (e.g., refinancing your mortgage allows you to pay your back taxes).
- It benefits the taxpayer (e.g., a loan improves your ability to repay your tax debt).
3. How to Apply for Lien Subordination
- Complete Form 14134 (Application for Certificate of Subordination).
- Provide detailed financial documents, including loan agreements and proof of repayment ability.
- Wait for IRS approval, which can take 30-90 days.
While a tax lien can make financial life difficult, lien subordination may offer a way to regain financial flexibility. If you need assistance navigating tax liens, professional guidance can make all the difference.
Struggling with a tax lien? Contact us to explore your options today!
