Rush Tax Relief - Federal Tax Lien Subordination

In previous blog posts, like Federal Tax Lien Options and How to Avoid a Federal Tax Lien, we discussed some of the options available to a taxpayer that has received a Notice of Federal Tax Lien. Some of the options we’ve already discussed are Installment Agreements (see more here: Tax Resolution Services: Installment Agreement), the Partial Payment Installment Agreement (see more here: Partial Payment Installment Agreement – What is it?), and the Federal Tax Lien Discharge, which we discussed at length in our previous two blog posts, Federal Tax Lien Discharge and Federal Tax Lien Discharge Requirements. In today’s post, we’ll be talking about the final option we mentioned on our list of Federal Tax Lien Options: Federal Tax Lien Subordination.

For those unaware of the dangers of a Federal Tax Lien and why a recipient of a Notice of Federal Tax Lien might want to consider rush tax relief services, please see our first blog in the series, Rush Tax Relief – Federal Tax Lien. A Federal Tax Lien occurs when the IRS places a lien against some or all of a person’s assets. Without corrective action, this lien will ultimately turn into a levy and the IRS can then seize the aforementioned assets against which the lien had been placed. There are options to stop this from happening, but acting in a timely manner is key! 

H2: Federal Tax Lien Subordination

According to the IRS’s page, Understanding a Federal Tax Lien, as of Dec. 24, 2020, a Federal Tax Lien Subordination “does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage.” 

To better understand when Federal Tax Lien Subordination might be the right option for you, we go further in depth on our Federal Tax Lien Subordination Page, stating that you “should apply for Tax Lien Subordination if you are hoping to refinance your home, apply for a loan or hoping to be approved for a mortgage. It is best practice to apply for tax lien subordination at least a few months before you start to apply for a loan, mortgage or refinancing.

“Typically, in the situation of a tax lien, the IRS has first priority to your assets thus it is difficult to receive any form of credit as creditors are low on the list of those with access to your assets, making you an undesirable constituent. When you are approved for a Certificate of Subordination it makes it easier to receive credit as the creditor becomes a top priority for your assets.”

As far as the requirements to apply for Federal Tax Lien Subordination, our page goes on to state that “essentially, you must demonstrate that receiving a Certificate of Subordination would improve your financial situation and make you better able to pay off your tax debt.”

So, similarly to the Federal Tax Lien Discharge requirements, in order to get approval in most cases, the taxpayer must demonstrate that the approval will improve their financial situation in a way that will allow them to repay a greater portion of their tax debt to the IRS. 

If you or someone you know is considering applying for Federal Tax Lien Subordination, give us a call first. The team at Bullseye Tax Relief is made up on highly-experienced and qualified tax resolution specialists. And guess what? We offer a free consultation for new clients! Call us today at (844) 582-3323.

In our next blog post, we’ll be wrapping up the Federal Tax Lien posts with our final one: Federal Tax Lien Withdrawal.

Sources

https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien

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