The Notice of Federal Tax Lien (NFTL) can stop or delay refinancing of home mortgages, other loans, or third-party collection of business accounts receivable.
Applying for a Certificate of Subordination of the NFTL can move a bank’s claim to property ahead of the IRS’s claim.
The IRS has filed a NFTL for unpaid tax balances.
Paying the tax balance in full can stop other collection actions.
The NFTL is a public record that can affect you and your property and assets.
When you don’t pay your taxes, the IRS can file a public document with the local and/or state authorities.
When the NFTL is filed, it alerts banks and financial companies that you owe the government.
The NFTL secures the priority of the government’s claim to your current and future property and assets until the balance is paid in full.
When a NFTL is filed because you owe taxes, then you must decide if a certificate of subordination is right for your situation.
Does my loan qualify as a Purchase Money Mortgage (PMM) or Purchase Money Security Interest (PMSI)?
Subordination isn’t needed if you are buying real property (like a home) or personal property (like a boat), because your loan can qualify as PMM or PMSI.
To qualify:
The bank loan moves ahead of the government’s claim to the property when the purchase price equals the loan amount.
See Publication 785, Purchase Money Mortgages, Purchase Money Security Interests, and Subordination of the Federal Tax Lien for more information.
Does my loan qualify as Equitable Subrogation?
Subordination isn’t needed when state law allows one person in place of another. This is called equitable subrogation. This can happen when a bank pays off a loan that was ahead of the NFTL and the new loan takes the old loan’s place in order to protect the bank’s claim on the property. This can include refinancing a mortgage.
Certificate of Subordination
If your situation doesn’t meet PMM, PMSI, or equitable subrogation, then you may qualify under one of the criteria for subordination.
Criteria for Subordination
The IRS doesn’t have to issue a certificate of subordination, but it can when it is in the best interest of the government.
Do I need to apply for a certificate of subordination if a third-party collects my business’ accounts receivable?
When a third-party collects a business’ accounts receivable, it is called a factoring agreement. The third-party steps into the shoes of the business to collect money owed to the business. The third-party collects the money owed to the business and takes a portion as a fee and pays the remaining amount to the IRS.
To subordinate a factoring agreement:
To apply for a certificate of subordination, submit Form 14134, Application for Certificate of Subordination of Federal Tax Lien. See Publication 784, How to Apply for a Certificate of Subordination of Federal Tax Lien and Publication 785 for more information.
The IRS will notify you by letter if your application was accepted or denied.
If your application is denied, you can request a conference with the IRS Independent Office of Appeals using a Form 9423, Collection Appeal Request. See Publication 1660, Collection Appeal Rights, for full explanation of the Collection Appeal Program.
There are other types of lien relief the IRS offers. See Lien Relief for more options.
Instructions on how to apply for a Certificate of Subordination of Federal Tax Lien
Guidelines for Notices of Federal Tax Liens and Centralized Lien Processing
Understanding your notice or letter
For more specifics on your notice, visit Understanding your IRS Notice or Letter on IRS.gov
Get Help topics
Browse common tax issues and situations at TAS Get Help
If you still need help
The Taxpayer Advocate Service is an independent organization within the IRS. TAS helps taxpayers resolve problems with the IRS, makes administrative and legislative recommendations to prevent or correct the problems, and protects taxpayer rights. TAS helps all taxpayers (and their representatives), including individuals, businesses, and exempt organizations. You may be eligible for free TAS help if your IRS problem is causing financial difficulty, if you’ve tried and been unable to resolve your issue with the IRS, or if you believe an IRS system, process, or procedure just isn’t working as it should.
TAS has offices in every state, the District of Columbia, and Puerto Rico. To find your local advocate’s number:
Low Income Taxpayer Clinics (LITCs) assist individuals whose income is below a certain level who need to resolve tax problems with the IRS. They also provide education, outreach, and information on taxpayer rights to individuals who speak English as a second language. LITCs represent taxpayers in disputes before the IRS and courts and help taxpayers respond to IRS notices and correct account problems. Services are offered for free or a small fee. LITCs are independent from the IRS and TAS. For more information or to find an LITC near you, see the LITC Page or Publication 4134, Low Income Taxpayer Clinic List. You can also request Pub. 4134 by calling 800-TAX-FORM (800-829-3676).
View our Interactive Tax Map
Let us help you navigate your way through the IRS. Visit our interactive tax map to see where you are in the tax process.
Taxpayer Roadmap
The taxpayer Bill of Rights is grouped into 10 easy to understand categories outlining the taxpayer rights and protections embedded in the tax code.
It is also what guides the advocacy work we do for taxpayers.
