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If the IRS filed a tax lien against your property due to unpaid taxes, and there is no way you can get it removed, it does not mean you cannot sell or refinance your house. As a matter of fact, the IRS is often interested in improving taxpayer's financial situation, which, in turn, increases your ability to pay back the debt to the government. If refinancing a property would increase your monthly disposable income, or allow you to pay a lump sum to the IRS, you might be eligible for tax lien subordination. If the IRS accepts your requests and issues a Certificate of Subordination of Federal Tax Lien, this document permits a potential creditor, whose name was listed on your request, to move ahead of the IRS in the creditor position, but only for the property named on the Certificate of Subordination of Federal Tax Lien. There are two reasons why the IRS might agree to subordinate a lien. These reasons are included in the IRS Code in Sections 6325(d)(1) and 6325(d)(2). Lien subordination under Section 6325(d)(1) is granted if refinancing of a taxpayer's property will provide a taxpayer with funds to full pay the tax liability, or at least to make a payment equal to the equity that is obtained. The IRS interest and penalties accumulate very fast, so it is often beneficial for a taxpayer to use this method to decrease the tax debt. Another basis for the tax lien subordination can be if the refinancing a property would decrease a taxpayer's monthly mortgage payments and, therefore, increase disposable income, which can be used to make larger monthly payments to the IRS for the tax liability. Section 6325(d)(2) authorizes tax lien subordination for this particular reason. The IRS requires form 14134 - Application for Certificate of Subordination of Federal Tax Lien to be completed for this purpose. It usually takes 45 days or more for the lien subordination request to be processed by the IRS and reviewed by the IRS Advisory Group Manager. If the IRS grants lien subordination, you might be required to send a payment before the IRS will send the Certificate of Subordination to you. However, if your request to subordinate a lien is based on Section and 6325(d)(2) of the IRS Code, you don't have to make a payment to get your certificate. If the IRS rejects your request to subordinate a lien, you can appeal this decision, but you need to make sure that your Collection Appeal Request is received before the deadline indicated on the IRS letter. Although it is possible to file form 14134 by yourself, hiring a tax resolution specialist to submit this form and, if necessary, to negotiate lien subordination on your behalf, will save you lots of time, and give you a better chance of success. At 20/20 Tax Resolution we specialize in resolving IRS and State tax liabilities on behalf of businesses and individual taxpayers. Our Enrolled Agents have extensive experience dealing with tax liens, as well as tax levies, repayment agreements, etc. If you choose not to hire a representative, but to deal with the situation by yourself, we still can provide a free consultation. This guest post was provided by Ian Jackson, a tax professional who writes for one of the premier tax resolution companies. Find out more of tax lien subordination at 20/20 Tax Debt Help.
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