Lien Discharges or Subordinations

If you’ve ever bought a car, a house or another asset using a loan, chances are, you’re already familiar with liens. Although you were probably pleased to have one when you closed your loan, other types of liens spell trouble. And when you’re ready to sell your property, it can be problematic if a lien discharge isn’t handled properly.

When you need federal, state or sales tax lien help in Colorado or anywhere in the U.S., BC Tax is ready to help. We can assist with IRS and other lien discharges or subordinations, withdrawals and tax lien protection.

What Is a Lien, and How Does It Work?

A lien is as a legal claim or a right against a property. When you buy a home using a mortgage, for example, your mortgage lender will place a lien on your property. Provided you satisfy the terms of your mortgage agreement, the lender won’t collect the remaining loan balance until you sell your property, but failing to meet your loan obligations could result in foreclosure. Auto loans work in a similar way.

Although mortgages and auto loans are helpful to most consumers, other kinds of liens can cause trouble. For example, failing to pay your property taxes might result in your local tax authority placing a lien on your house. Even if you pay your mortgage on time, your tax authority could still initiate foreclosure proceedings if you don’t pay the balance due.

Different Types of Tax Liens

You may encounter tax liens at three different levels: federal tax, state tax and sales tax. Here’s how and why these tax liens can be imposed on you or your business:

  • Federal/IRS Tax Lien: When you fail to pay a tax debt to the IRS, the government makes a legal claim against your property, which may include personal property, real estate and other assets. This lien protects the government’s interests and alerts creditors. If you need IRS tax lien help, including discharges or subordinations, turn to BC Tax.
  • State Tax Lien: If you owe state taxes, the state government may issue a lien — a legal claim on your property and assets. Like a federal tax lien, this information is sent to lenders and impacts your credit report. For state tax lien help and removal, start by calling BC Tax.
  • Sales Tax Lien: If your business is required to collect sales tax, you must report and pay that sales tax to the IRS or state government. Failure to pay could result in a sales tax lien on your business in Colorado or elsewhere. For sales tax lien help, contact BC Tax.

How Does Subordination Work?

Many property owners have more than one lien on a property. For example, if you have a primary mortgage and a home equity loan, your property has two liens. But in the event that you sell, which lien gets paid first? The process that assigns payout priority is called subordination.

Subordination simply assigns each lien a “position” that determines the order in which the debt is satisfied. In our mortgage example, the primary mortgage is likely in first position. That means it’s the first to be paid after a sale. Remaining proceeds pay the second lien, which is the home equity loan. Once all liens have been satisfied, money left over goes to the homeowner.

It’s most advantageous for a lender to be in the first position because it’s most likely that there will be enough sale proceeds to cover the debt. But sometimes, you might have a lien that makes buying or selling real estate difficult. If that occurs, call BC Tax.

How Do I Discharge a Tax Lien?

Liens are public documents, and anyone who wants to can check to see if you have a lien on your property. In fact, it’s one of the first things a lender does when it evaluates a loan application. The presence of a tax lien makes it extremely difficult to buy or sell.

BC Tax can help you win an IRS Certificate of Discharge if you’re in this position. We can also provide guidance in the event that you need to subordinate a lien.

BC Tax: Your Tax Lien Help Center in Colorado

Need tax lien help near you? BC Tax helps people across Colorado and the country win lien discharges and subordinate debts. If you need help with tax lien protection or subordination, call us — we can help.

We’ll start by providing a complimentary consultation conducted by a Senior Tax Consultant. We’ll evaluate your situation carefully to determine the scope of work involved and assign a tax professional to your case who will work quickly to achieve your goals.

To schedule a consultation, call BC Tax at (800) 548-4639 or complete our online form.

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