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Published:   |   Last Updated: November 4, 2022

Subordination of the Notice of Federal Tax Lien (Lien Subordination)

A “subordination” does not remove the Notice of Federal Tax Lien  (NFTL) but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage

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Station Overview

Subordination of the Notice of Federal Tax Lien (NFTL) is filed as public record. Both the original NFTL and the subordination will show on public record, but the subordination shows that the IRS has allowed other creditor(s) to move ahead of the IRS in lien priority. The NFTL still remains in effect when a subordination is issued.

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What does this mean to me?

The IRS may consider subordinating the NFTL when:

  • IRS will receive an amount equal to the lien or interest to which the certificate of subordination is issued
  • It will increase the government’s interest and make collection of the tax liability easier

How did I get here?

You have an unpaid tax balance and an NFTL has been recorded as public record, putting other creditors on notice that you owe the IRS. You would like the IRS to consider subordinating the NFTL as a means of addressing your tax debt. For example, you may be considering refinancing a home mortgage to take equity from the house to pay down your tax debt, or refinancing to lower your monthly mortgage payments in order to pay more towards a monthly payment plan with the IRS.

Additional information can be found in Publication 784, Instructions on how to apply for a Certificate of Subordination of Federal Tax Lien; and Publication 785, Purchase Money Mortgages, Purchase Money Security Interests, and Subordination of the Federal Tax Lien.

What are my next steps?

To request subordination, complete Form 14134, Application for Certificate of Subordination of Federal Tax Lien. See Publication 784  and Publication 785 for more information.

Once the IRS has reviewed your application for subordination of the NFTL, you will receive Letter 4027, Advising of Action on Application for Subordination of Federal Tax Lien, with its determination and any required action you need to take. If the IRS denies your request, you will be advised of your right to appeal under the Collection Appeal Program (CAP).

See Lien Relief additional options to address the NFTL.

 

 

Where can I get additional help?

Understanding your notice or letter

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If you still need help

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.

Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.

Additional Contact Information

  • Centralized Lien Operation: To resolve basic and routine lien issues: verify a lien, request lien payoff amount, or release a lien, call 800-913-6050 or fax 855-753-8177.
  • Collection Advisory Group: For all complex lien issues, including discharge, subordination, subrogation, or withdrawal; find contact information for your local advisory office in Publication 4235, Collection Advisory Group Addresses.
  • Under certain circumstances you may be able to appeal the filing of a Notice of Federal Tax Lien. For more information, see Publication 1660.
  • Centralized Insolvency Operation: If you are questioning whether your bankruptcy has changed your tax debt, call 800-973-0424.
  • Contact the IRS:

Related Notices and Letters

  • Form 668 (Y)(C), Notice of Federal Tax Lien
  • Letter 4027, Advising of Action on Application for Subordination of Federal Tax Lien
  • Letter 4053, Conditional Commitment to Subordinate Federal Tax Lien
  • Form 14134, Application for Certificate of Subordination of Federal Tax Lien
  • Publication 784, Instructions on how to apply for a Certificate of Subordination of Federal Tax Lien
  • Publication 785, Purchase Money Mortgages, Purchase Money Security Interests, and Subordination of the Federal Tax Lien