If you have an IRS tax debt that you haven’t paid, the government can place a tax lien on your property. A tax lien is a formal legal claim against your property to recover taxes, and it gives the government a legal right to your property if you don’t pay your tax debt. IRS lien subordination is one way to seek relief from a tax lien and move forward with your life and finances.
At Camden & Meridew, P.C., you will find a trusted Indiana lien subordination attorney who can help you determine if you are a good candidate for subordination and persuasively make your case to the IRS.
IRS Lien Subordination: How It Can Help You
IRS lien subordination is one option offered by the IRS to help you get access to financing, which ultimately helps the agency recover the debt that you owe. The IRS does not grant lien subordination to everyone, but an attorney can help you apply and greatly improve your chances of being approved. When meeting with your tax lawyer, it’s helpful to understand the basics of tax lien subordination.
What Is Tax Lien Subordination?
When the IRS places a lien on your property, it automatically has priority rights to your property over other creditors, which can make it difficult if not impossible to get a new loan or refinance your home or other property. In a nutshell, tax lien subordination means the IRS gives up its priority—or first position—on your property. Lien subordination does not clear the tax lien. The lien remains on the property, but the IRS no longer has priority over other lenders.
How Can IRS Lien Subordination Help You?
Since lien subordination doesn’t resolve the lien, you may be wondering if it is even worth the trouble to apply. However, subordination can go a long way in helping you eventually pay off the debt that you owe because it makes it possible for you to get a new loan or refinance your property.
When the IRS places a lien on your property, it is almost impossible to get a new loan or refinance because the lender knows that it is not first in line to get paid should another creditor institute foreclosure proceedings. With lien subordination, the IRS agrees that the lender can become first in line for repayment, which makes the lender’s loan to you less risky. The ability to get a loan or refinance can free up cash or make your monthly payments more manageable so that you are in a better position to pay your tax bill.
How to Apply for IRS Lien Subordination
The IRS provides an official form that must be completed to apply for tax lien subordination (Form 14134, Application for Certificate of Subordination of Federal Tax Lien). However, completing the form is not enough to get the IRS to agree to the subordination. Along with the form, you must effectively convince the IRS that agreeing to the subordination will help them recover the debt that you owe or will at least not put them in a worse position.
One way to do this is to offer a lump sum payment to the agency equal to the amount that they stand to lose if they give up their priority. For example, if your mortgage is $400,000 and you want to refinance for $440,000, you would pay the IRS the $40,000 that they could potentially lose by lowering their priority.
Another way is to convince the IRS that the subordination will improve your financial situation enough to allow you to pay back your tax debt. For example, if the subordination might decrease your mortgage payments and allow you to begin making payments on your tax debt.
Do You Need a Federal Tax Lien Subordination Lawyer?
The IRS provides resources to help taxpayers understand the tax lien subordination process, but it can still be complicated, and you need strong evidence to support your application. Having a federal tax lien subordination lawyer in your corner can make all the difference in being granted relief.
Julie Camden at Camden & Meridew, P.C. is an Indiana lien subordination attorney with experience representing individual and business clients in a variety of financial situations. She can help you determine if IRS lien subordination is a good option for you and represent you throughout the process. To learn more about how we might help you, call us at 317-770-0000 or fill out our online contact form to schedule a consultation.