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Posted On May 09, 2019
IRS Tax Lien Subordination in Henderson, NV

IRS Tax Lien Subordination in Henderson, NV

An IRS tax lien could make it difficult for a debtor to sell or refinance a property in Henderson. A lien subordination does not clear federal tax liens on a debtor’s property. It could make it easier for tax debtors to refinance their homes or obtain a loan to free up money to pay debts, including their delinquent taxes.

What is IRS Tax Lien Subordination?

A federal tax lien automatically jumps to the top of the list of creditors with an interest in the delinquent taxpayer’s property. A federal tax lien is not a form of immediate collection action. However, if one is placed on a taxpayer’s home, he or she may be unable to sell or refinance the home until the lien is removed.

The preferable way to remove a tax lien would be to pay the debt in full. If that is not possible and discharge of the lien is unlikely, a lien subordination could be the next option. If approved, the subordination could allow another creditor to move ahead of the IRS in priority. This does not remove the taxpayer’s responsibility for tax liabilities, including interest and penalties owed. It also might not provide any tax debt help if the debtor wants to sell his or her property.

What is the Process for Requesting a Tax Lien Subordination?

To request a tax lien subordination, the taxpayer would apply for a “Certificate of Subordination of Federal Tax Lien” by completing IRS Form 14134. This form should be filed at least 45 days prior to a loan settlement meeting. Documentation regarding the settlement meeting should also be submitted with the form.

A basis for subordinating the lien must be given to the IRS. The IRS will agree to a lien subordination and issue a certificate only if it is in its best interests.

  • The debtor agrees to pay an amount that is equal to the interest subordinated
  • Refinancing the loan will allow the taxpayer to pay more on his or her tax debt each month

What Happens if the Request Is Denied?

If the request for tax lien subordination is denied, the taxpayer has the right to appeal. The taxpayer may request to speak to the manager of the IRS employee who denied the request. If this does not flip the denial, the next step would be to file Form 9423 to request a collection appeal.