If the IRS filed a tax lien against your property for unpaid taxes, and there’s no way you can remove it, it doesn’t mean you can’t sell or refinance your home. In fact, the IRS is often interested in improving a taxpayer’s financial situation, which, in turn, increases their ability to pay their debt to the government. If refinancing a property would increase your disposable monthly income or allow you to pay a lump sum payment to the IRS, you may be eligible for tax lien subordination.

If the IRS accepts your applications and issues a Certificate of Subordination of Federal Tax Lien, this document allows a potential creditor, whose name was on your application, to preempt the IRS in creditor position, but only for the property named on the Certificate of Subordination of Federal Fiscal Bond.

There are two reasons why the IRS might agree to subordinate a lien. These reasons are included in the IRS Code at Sections 6325(d)(1) and 6325(d)(2). Lien subordination pursuant to Section 6325(d)(1) is granted if the refinancing of a taxpayer’s property will provide the taxpayer with funds to pay the tax liability in full, or at least to make a payment equal to the principal that is obtained. IRS interest and penalties add up very quickly, so it is often beneficial for a taxpayer to use this method to reduce tax liability.

Another basis for tax lien subordination may be if refinancing a property would decrease the taxpayer’s monthly mortgage payments and thus increase disposable income, which can be used to make larger monthly payments to the IRS for the liability. tax. Section 6325(d)(2) authorizes the subordination of the tax lien for this particular reason.

The IRS requires that Form 14134 – Application for Certificate of Federal Tax Liaison Subordination be completed for this purpose. It generally takes 45 days or more for the IRS to process the lien subordination request and review it by the IRS Advisory Group Manager.

If the IRS grants a lien subordination, you may need to submit a payment before the IRS will send you the Certificate of Subordination. However, if your request to subordinate a lien is based on IRS Code Section y 6325(d)(2), you do not have to make any payment to obtain your certificate.

If the IRS denies your request to subordinate a lien, you may appeal this decision, but you must ensure that your Collection Appeal Request is received by the deadline indicated in the IRS letter.

Although it is possible to file Form 14134 yourself, hiring a tax resolution specialist to file this form and, if necessary, negotiate a lien subordination on your behalf will save you a lot of time and give you a better chance of success.