When your clients face the burden of an IRS tax lien, obtaining a certificate of subordination can be a powerful tool in their financial recovery. As a CPA, tax professional, or enrolled agent, your knowledge of this essential strategy is invaluable in helping clients regain control of their financial lives. In this informative article, we’ll delve into the intricacies of the certificate of subordination process, providing you with the guidance necessary to effectively conquer issued federal tax liens and give your clients the best chance at a fresh financial start.
It won’t come as a surprise to you that when it comes to collecting their money, the IRS doesn’t play around. They mean business and your client’s denial or tossing aside unopened letters won’t make the problem go away. To the contrary, ignoring IRS reminders could result in an even greater loss than the initial tax liability.
Federal Tax Liens
If imposed and ignored, a federal tax lien can have devastating ramifications. A federal tax lien is issued when the government makes a legal claim against the taxpayer’s property in order to pay delinquent taxes. Property can include anything from real estate to personal property and financial assets. Does this include jewelry? Yes. What about the boat your client has docked at a marine? Yes, even the boat.
A federal tax lien is an official IRS “shout out” that the government has a claim on the property. The only thing that supersedes it is a property tax lien or a document filed prior to the NFTL. A federal tax lien serves as a public notice to other creditors that everyone else must take his or her place in line behind the IRS.
Certificate of Subordination
When your client is issued a federal tax lien, it can be a scary experience for taxpayers, but all is not lost. There are various ways you can conquer your clients’ tax lien issues with the IRS. One is a Certificate of Subordination. This is used when the client wants to refinance their home and would like it to supersede a federal tax lien.
In 2008 the IRS announced an expedited process that would make it easier for financially distressed homeowners to push aside the issuance so they could sell or refinance the mortgage on their property.
Discharge The Claim
As your client’s representative, you can work with lenders to request that the IRS make a tax lien secondary to the lending institution that’s restructuring a loan. Under specific circumstances, you can request the discharge of the IRS claim if the home is being sold for less than the amount of the mortgage lien.
Application Process
How long does the process take? Is it worth the wait? Absolutely. Especially when you consider the alternative. Once the completed application is submitted, the process takes approximately 30 days. However, should an economic downturn be an issue, the IRS will work to speed requests.
Many people think of the IRS as the bad guys, but when you investigate, you’ll see there are ways you can help your clients by representing them. IRS Solutions’s guide to 4 Steps to Getting Started in Tax Resolution is FREE. Grab your copy now and start offering – and charging for – services that will boost your bottom line year round. Get started in tax resolution today. Learn more about all of the features IRS Solution membership brings
