Tag: #IRS Representation

  • IRS Form 14134: How to Subordinate a Tax Lien to Refinance

    IRS Form 14134: How to Subordinate a Tax Lien to Refinance

    When the IRS files a Notice of Federal Tax Lien (NFTL) in the public records, it attaches to all current and future property owned by the taxpayer, including real estate. For property owners attempting to refinance an existing mortgage, obtain a second mortgage, or secure a commercial line of credit, that public filing creates an immediate barrier. Title companies will identify the federal lien on the title commitment, and mortgage underwriters will refuse to fund until the lien priority issue is resolved.

    Many taxpayers assume the only way forward is paying off the entire underlying tax liability in a lump sum. When liquid capital is unavailable to clear the balance, the legal remedy under federal tax law is obtaining an official Certificate of Subordination using IRS Form 14134.

    What Is IRS Tax Lien Subordination (Form 14134)?

    A lien subordination does not release or forgive the tax debt, nor does it extinguish the Notice of Federal Tax Lien from the public record. Those functions belong to an IRS lien release or a lien withdrawal under Form 12277.

    Instead, subordination alters the legal priority order of creditors.  If the IRS filed its NFTL before a new lender issues a mortgage, the IRS sits in a superior position. Because conventional, FHA, VA, and commercial lenders require first lien position on real estate collateral, they will not close while an IRS lien sits ahead of them.

    Through IRS Form 14134 (Application for Certificate of Subordination of Federal Tax Lien), the IRS voluntarily agrees to step behind the incoming lender in legal priority. The federal tax lien remains attached to the real estate, but the new mortgage or deed of trust takes senior priority. This allows title to insure the lender’s required position, enabling the transaction to fund and close.

    How to Qualify to Subordinate a Federal Tax Lien

    The IRS does not approve subordination requests out of goodwill. The Internal Revenue Code provides two distinct statutory bases under IRC § 6325(d) where subordination can be granted. An application must clearly establish qualification under one of these two subsections.

    1. IRC § 6325(d)(1) — Payment Equal to the Government’s Interest Under subsection (d)(1), the taxpayer agrees to pay the IRS an amount equal to the lien priority being surrendered. This standard commonly applies to cash out refinances or equity based financing.

    For instance, if a property owner refinances an existing first mortgage to pull out equity, the IRS will calculate its equity interest in the property. If the net cash out proceeds from the loan are paid directly to the IRS at closing, the IRS will issue a Certificate of Subordination. In this scenario, the government receives immediate, direct payment toward the outstanding tax liability in exchange for allowing the new lender to step ahead.

    2. IRC § 6325(d)(2) — Best Interest of the Government Subsection (d)(2) does not require a direct payoff from the loan proceeds at closing. Instead, the taxpayer must demonstrate that granting subordination will ultimately increase the amount the government collects and facilitate overall collection of the tax debt.

    The most common application of IRC § 6325(d)(2) involves rate and term refinances. If a homeowner refinances an existing high interest mortgage to secure a lower interest rate, their monthly housing expense drops. A formal narrative statement and financial analysis must accompany the application, proving to the IRS Advisory Group that the resulting monthly savings will increase the taxpayer’s disposable net income, directly facilitating continued payments under an existing or proposed IRS Installment Agreement.

    For commercial enterprises, subsection (d)(2) can also be justified when a working capital loan or equipment line of credit enables the business to maintain operations, preserve payroll, and continue generating operating income to satisfy payroll tax or corporate income tax obligations.

    Checklist: Documents Needed to File IRS Form 14134

    Form 14134 is processed through the centralized IRS Advisory Group. Incomplete submissions are rejected, which can cause mortgage rate locks to expire and purchase or refinance contracts to fall out of escrow. A complete submission package requires substantial substantiating documentation:

    • Current Title Report: A comprehensive title commitment or preliminary report identifying legal descriptions, recorded deed information, and all encumbrances with current seniority over the federal lien.
    • Valuation Support: A disinterested professional appraisal, recent county property tax assessment, or formal valuation establishing the fair market value of the encumbered property.
    • Proposed Closing Disclosure or Settlement Statement: A line item draft of the HUD-1 or Closing Disclosure outlining all payoffs, proposed closing costs, lender fees, and anticipated net proceeds.
    • Proposed Loan Documentation: The loan commitment letter detailing the new principal balance, interest rate, amortization schedule, and monthly debt service.
    • Statutory Justification Statement: For applications submitted under IRC § 6325(d)(2), a signed, detailed narrative outlining how the transaction facilitates collection.

    IRS Form 14134 Processing Time: How Long Does Approval Take?

    The IRS Advisory Group requires applications for Form 14134 to be submitted at least 30 calendar days prior to the targeted transaction closing date. Applications submitted inside this 30-day window face elevated risk of closing delays.

    Once approved, the IRS issues a conditional commitment letter outlining the required closing conditions. Upon closing and escrow fulfillment, including verification that any required payoff funds under subsection (d)(1) are wired directly to the government, the IRS releases the formal Form 669-D or Form 669-E (Certificate of Subordination of Federal Tax Lien), which the title company records in the local county property records.

    Resolve Your IRS Tax Issue Directly

    Dealing with back taxes, unfiled returns, or IRS collection actions requires prompt, licensed representation. As a licensed CPA firm authorized to practice before the IRS under Circular 230, Andris Financial Services manages IRS communications, transcripts, and formal resolution options on your behalf. Submit your case details below for a confidential, same day review.

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  • The Sole Proprietorship Risk: How the IRS Evaluates Personal vs. Business Expenses on IRS Form 433-A

    The Sole Proprietorship Risk: How the IRS Evaluates Personal vs. Business Expenses on IRS Form 433-A

    For many self-employed individuals and sole proprietors, running a business through a single bank account starts as a matter of convenience. Client payments arrive in one checking account, and rent, software subscriptions, groceries, personal auto notes, and utility bills are paid out of that same account. While commingling funds is a common operational misstep, it creates severe exposure during an IRS collection investigation.

    When a sole proprietor falls behind on taxes and attempts to set up a monthly Installment Agreement, request Currently Not Collectible (CNC) status, or submit an Offer in Compromise (OIC), the IRS does not simply look at net income on Schedule C. Instead, the Revenue Officer conducts a formal financial analysis governed by the Internal Revenue Manual (IRM) Part 5, Chapter 15, Section 1 (Financial Analysis Handbook).

    Under IRM 5.15.1, commingled accounts trigger a rigorous audit of bank deposits and expense classifications that can artificially inflate your perceived ability to pay.

    The 3 to 12-Month Bank Deposit Analysis

    When resolving self-employment tax liabilities on Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals), the IRS requests between 3 and 12 months of complete bank statements across every personal and business account.

    Under IRM 5.15.1.19 (Business Income), the Revenue Officer performs a bank deposit reconciliation. The IRS adds together every single credit and deposit across all bank accounts and presumes that total represents taxable gross business receipts. In a commingled environment, business owners routinely transfer money between accounts such as moving $3,000 from a business account to a personal account and later transferring $1,500 back to cover an unexpected operating expense. Without meticulous general ledger records, the IRS counts those internal transfers multiple times, creating thousands of dollars in fictitious gross income. The taxpayer must provide documentary proof for every non-income deposit, including loan proceeds, capital contributions, insurance reimbursements, and inter-account transfers. If you cannot substantiate the source, the deposit remains classified as business income.

    Deductible on Schedule C vs. Allowable Business Expenses

    One of the most common friction points for self-employed taxpayers is the difference between an ordinary and necessary tax deduction for return filing and an allowable business expense for IRS collections.

    Under IRM 5.15.1.18 (Business Expenses), the IRS only allows expenses that are directly necessary to produce income. In a commingled account where personal and business transactions overlap, the IRS systematically disallows items that do not meet strict collection standards. If the business account pays for a home cell phone family plan, meals without detailed business agendas, streaming services, or personal vehicle repairs, the Revenue Officer removes those line items from allowable business operating costs. If a sole proprietor uses cash flow to pay down personal credit cards or unsecured loans that were used for mixed business/personal purchases, the IRS generally subordinates those debts, requiring the cash flow to be paid toward the tax liability instead. Depreciation and amortization deductions that reduce taxable income on Schedule C are added straight back into disposable income on Form 433-A because they do not represent actual monthly out-of-pocket cash requirements.

    The Double Squeeze: Collection Financial Standards on Form 433-A

    Once the IRS strips personal expenses out of the business ledger, they do not simply move those expenses over to your personal budget at their actual cost. Instead, the IRS subjects your household to the strict National and Local Collection Financial Standards. Food, clothing, and miscellaneous are capped at the fixed National Standard baseline based on family size, regardless of what you actually spent from the business account. Housing and utilities are capped at the local county standard for your primary residence and vehicle operating and ownership costs are capped at local transportation baselines.

    For example, if a business owner earns $10,000 per month and spends $4,000 on real operating costs and $5,000 on actual household living costs via a commingled account, they appear to have $1,000 in monthly disposable income.

    However, if the IRS disallows $1,500 of mixed expenses and caps household living costs at $3,500 under the National Standards, the IRS calculates the taxpayer’s monthly disposable income at $2,500 ($10,000 revenue minus $4,000 allowable business costs minus $3,500 allowable living standards). The IRS will then demand a monthly payment plan based on $2,500 per month, a figure the taxpayer cannot afford under their current cash flow structure.

    How to Fix Commingled Records Before Facing the IRS

    Entering an IRS collection negotiation with commingled, unorganized bank accounts almost always leads to inflated monthly payment demands or rejected settlement offers. Resolving the issue requires a structured accounting approach that establishes clean financial boundaries and substantiates every dollar of cash flow to protect your business operations and ensures IRS payment determinations are based on real mathematical ability to pay rather than arbitrary collection formulas.

    Andris Financial Services helps business owners reconstruct clean financial records, accurately calculate allowable living expenses, and build resolution packages designed to protect their financial future.

    Submit your case details below for a confidential same day review.

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  • Behind on Business Payroll Taxes? What IRS Letter 1153 Means for Your Personal Bank Account

    Behind on Business Payroll Taxes? What IRS Letter 1153 Means for Your Personal Bank Account

    When a business falls behind on payroll, owners often juggle vendors, rent, and operations just to keep the doors open. If the IRS is not receiving trust fund taxes, the federal income tax, Medicare, and Social Security withheld from employee paychecks, the IRS takes aggressive enforcement action. Under Internal Revenue Code Section 6672, the IRS can assess the Trust Fund Recovery Penalty (TFRP), piercing corporate protection and making individuals personally liable for unpaid trust fund taxes.

    What the Trust Fund Recovery Penalty Actually Covers

    Business payroll taxes consist of two distinct portions:

    • The Employer Match: The employer’s matching share of Social Security and Medicare taxes, along with federal unemployment tax (FUTA).
    • The Trust Fund Taxes: The money withheld directly from employee paychecks. The government considers this money held in trust for the United States.

    The Trust Fund Recovery Penalty applies directly to the withheld trust fund taxes. The IRS does not allow corporate bankruptcy or entity dissolution to wipe out this balance.

    The Two Statutory Tests: Responsibility and Willfulness

    Under Section 6672, a Revenue Officer must prove two distinct elements to hold an individual personally liable.  The first is whether you were responsible person. Responsibility is determined by your status, duty, and authority within the business. The IRS looks at who had the authority to direct payments, sign checks, make payroll, hire or fire employees, or manage bank accounts. This can include corporate officers, directors, LLC members, bookkeepers with check-signing power, or payroll managers.

    The second element is willful failure to pay. Under federal tax law, willful does not require criminal intent or malice. If a responsible person knew trust fund taxes were due and paid other creditors (such as rent, suppliers, utilities, or employee net wages) instead of the IRS, the legal standard for willfulness is met.

    The Warning Shot: IRS Letter 1153 and Form 2751

    Before the IRS can assess the penalty personally, they issue Letter 1153 via certified mail along with Form 2751 (Proposed Assessment of Trust Fund Recovery Penalty).  You have exactly 60 days from the letter’s date to file a formal written protest with the IRS Independent Office of Appeals.  You should not sign Form 2751 immediately. Form 2751 is an agreement consenting to immediate personal assessment. Signing it waives your appeal rights and allows the IRS to place federal tax liens on your personal property and levy personal accounts.

    Why The Form 4180 Interview Determines Personal Liability

    During a payroll tax investigation, the Revenue Officer typically schedules an interview using Form 4180 (Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Examination of Business Accounts). Every question on Form 4180 is designed to establish whether you had signature authority, authorized payroll, or directed bill payments. Answers provided during this interview become permanent administrative evidence. Navigating this process requires careful review before meeting with agency personnel.

    Steps to Take If You Receive Letter 1153

    • Track the 60-day deadline. Mark the exact statutory appeal deadline shown on Letter 1153.
    • Gather entity records. Pull canceled checks, bank signature cards, organizational agreements, and internal email records that show who controlled company disbursements.
    • Formulate an administrative defense or resolution strategy. If you were not a responsible person or lacked decision-making authority over payables, file a timely administrative appeal. If liability cannot be disputed, explore installment agreements, transcript reviews, or settlement options to manage collection exposure.

    Need professional representation to manage an IRS Letter 1153, prepare for a Form 4180 interview, or resolve delinquent employment tax notices? Schedule a direct diagnostic review with Andris Financial Services. My firm is authorized to represent any taxpayer before the IRS.

    Submit your case details below for a confidential same day review.

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  • Resolving IRS Business Debt: Why Form 433-B Financial Statements Demand CPA Precision

    Resolving IRS Business Debt: Why Form 433-B Financial Statements Demand CPA Precision

    When a business falls behind on payroll taxes (Forms 940/941) or corporate income tax, the Internal Revenue Service does not evaluate the company’s ability to pay using the company’s financial statements. Instead, the agency relies on a detailed six-page document named IRS Form 433-B (Collection Information Statement for Businesses).

    IRS Form 433-B serves as the financial baseline for establishing business payment plans, negotiated Installment Agreements, and Partial Payment Installment Agreements (PPIA). However, submitting this form without careful accounting analysis often leads to inflated monthly payment demands that strain operating cash flow and cause the IRS to disallow legitimate operating expenses altogether.

    Understanding how IRS Form 433-B evaluates business assets and cash flow reveals why precise accounting oversight is essential when negotiating with the IRS.

    What Is IRS Form 433-B?

    IRS Form 433-B is the official collection document used by IRS Revenue Officers and the Automated Collection System (ACS) to evaluate a business entity’s assets, liabilities, income, and expenses.

    Unlike basic individual tax disclosures, Form 433-B requires a comprehensive operational breakdown, including:

    • Current bank account balances and available credit lines
    • Aged Accounts Receivable (A/R) schedules
    • Business real estate, vehicle, and equipment equity
    • Monthly profit and loss averages
    • Controllable vs. uncontrollable operating expenses

    The primary goal of the IRS when reviewing Form 433-B is to calculate the business’s Reasonable Collection Potential (RCP).  RCP is the total amount the IRS believes it can collect through asset liquidation and monthly cash flow.

    View IRS Form 433-B

    Critical Areas Where IRS Form 433-B Reporting Goes Wrong

    1. Accounts Receivable (A/R) Overstatement

    Section 4 of IRS Form 433-B asks for a detailed breakdown of all accounts receivable. Unrepresented business owners frequently report the total gross A/R balance shown on their software aging report.

    Gross Accounts Receivable rarely reflects actual collectible cash. Uncollectible accounts, aged receivables past 90 days, disputed invoices, and bad debt reserves must be properly identified and substantiated. If uncollectible accounts are listed as liquid assets, the IRS will include those numbers in your asset equity calculation, demanding upfront payments on money the business will never collect.

    2. Miscalculating Asset Equity vs. Encumbrances

    The IRS evaluates business assets such as machinery, inventory, company vehicles, and real estate at Quick Sale Value (QSV), which is generally estimated at 80% of Fair Market Value (FMV).

    To determine net equity, existing loans, liens, and encumbrances against those assets must be deducted correctly. Failing to properly document secured debts or using standard market valuations instead of QSV inflates the business’s perceived net worth, prompting the IRS to demand asset liquidation or refinancing before granting a payment plan.

    3. Disallowed Operating Expenses & Cash Flow

    Section 5 of IRS Form 433-B compares total monthly business income against allowable monthly operating expenses to calculate net disposable income.

    The IRS scrutinizes operating costs strictly under Internal Revenue Manual (IRM) guidelines. Expenses that lack clean P&L documentation or appear discretionary (such as vehicle allowances, owner distributions, or unverified administrative fees) are routinely disallowed. When legitimate operational expenses are disallowed, the IRS calculates an artificially high monthly disposable income that results in an unaffordable monthly payment installment.

    The Value of Professional Financial Representation

    IRS Form 433-B is a formal financial disclosure that dictates your business’s operating capacity for years. A structured resolution process involves securing an immediate collection hold by placing a formal stay on active IRS collection actions (such as bank levies or account garnishments) using Power of Attorney representation while financial schedules are assembled.  It also includes reconciling the financial statements by aligning profit and loss statements, balance sheets, and bank records to ensure all allowable business operating costs are clearly substantiated under IRM standards.  Structuring manageable terms by presenting an accurate Reasonable Collection Potential (RCP) schedule to establish an Installment Agreement or Partial Payment Installment Agreement that preserves working capital is the ultimate goal when completing form 433-B.

    Protect Your Business Cash Flow

    If your business is facing back taxes or an IRS collection notice, taking control of your financial presentation early is critical. Negotiating directly with the IRS without verified financial schedules risks overstating available cash flow and locking your company into untenable monthly terms.

    Andris Financial Services is a CPA firm authorized to represent any taxpayer or business when dealing with the IRS. I provide direct representation, financial schedule reconstruction, and IRS resolution for Texas business owners.

    Submit your case details below for a confidential same day review.

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  • Why You Can’t Just Pay Off an IRS Tax Lien at a Texas Real Estate Closing

    Why You Can’t Just Pay Off an IRS Tax Lien at a Texas Real Estate Closing

    Paying off an IRS tax lien at a Texas real estate closing should satisfy the IRS but it isn’t that simple.  To qualify for the removal of a tax lien at a real estate closing, you must complete the IRS application and substantial documentation such as deeds, appraisals, valuations, title reports, and closing statements. Find out why paying off the lien does not allow a real estate closing to go through and which parts are specific to Texas.

    Where Are Federal Tax Liens Filed?

    The IRS files a Notice of Federal Tax Lien in the Texas county where the real estate is located. When a title company performs a title search for the real estate closing, they will research the county records in Texas.  If a federal tax lien is discovered the closing will stall as a title company is not allowed to close on a property without clear title.  The next step is to request the removal of the lien with the IRS.

    How To Save a Texas Real Estate Closing

    The owner of the Texas property can revive the closing by filing for an IRS tax lien discharge.  Just paying off the lien is not an option, because the IRS has to file a release of lien to remove the lien from the property after payment.  The lien release will not be processed in time to save any earnest money or deposits placed on the property.  The tax lien discharge is specifically written in the tax code to allow a real estate transaction to go through when there is a lien on the property. 

    Read My IRS Form 14135 Overview

    IRS Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien will need to be submitted to the IRS.  The seller can complete the application or they can contact a tax professional.  It is important to note the IRS authorizes certain tax professionals to represent the seller in the application for the discharge.  The professional can be a Certified Public Accountant, Attorney, or Enrolled Agent. 

    The IRS will consider discharging the tax lien for the following conditions:

    • The value of the remaining properties in the seller’s name is twice the liability of the IRS tax lien.
    • The equity from the sale of the Texas real estate will pay off the lien or will partially pay the lien
    • The Texas real estate has no value left after it closes so the IRS will not be able to collect on the lien.
    • Proceeds from the property sale are in dispute and another lienholder has a claim to funds from closing.

    As you may notice, paying off the lien with cash prior to closing is not an option.  Paying off the lien requires filing a lien release in the Texas county of record which adds to the processing time. If the IRS approves the lien discharge, they will issue a conditional commitment to discharge or a certificate of discharge to allow the real estate closing to go through. 

    What Happens After The Closing?

    Just because the IRS allows a Texas real estate transaction to go through, it does not mean the lien disappears.  If any of options on Form 14135 does not pay off the federal tax lien balance, the IRS will attach the remaining balance of the lien to the seller’s remaining property or to the property owner itself.  The Texas county clerk will file a new Notice of Federal of Tax Lien document for the remaining tax lien value.

    Do You Need Assistance Now?

    As noted above, the IRS authorizes three groups of tax professionals to represent a taxpayer when applying for tax lien discharge.  As a Texas Certified Public Accountant, I can represent any client needing assistance with Form 14135 for a Texas real estate closing. Any incomplete or incorrect documentation can delay closing.  I have worked with title companies and tax liens for over 15 years and understand the urgency needed to protect the closing timeline. Contact me to protect your Texas real estate closing today!

    Submit your case details below for a confidential same day review.

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  • Clean Record or Permanent Scar? Understanding IRS Lien Releases, Withdrawals, and Discharges

    Clean Record or Permanent Scar? Understanding IRS Lien Releases, Withdrawals, and Discharges

    Choosing the Correct IRS Lien Remedy

    If the IRS has placed a federal tax lien against your personal assets, you do not have to allow the lien to prevent you from making financial decisions.  Taxpayers often ask how to remove a tax lien or how long does a tax lien last.  The answer is the IRS will remove a lien from your record in one of three ways.  The options are a lien release, lien withdrawal, and lien discharge.  Each option has a different process so removing a lien is not a one size fits all process.

    Why is a Notice of Federal Tax Lien Filed?

    The IRS will file a Notice of Federal Tax Lien after income, payroll, or excise taxes were not paid and the IRS has given the appropriate amount of time to get the delinquency resolved.  The Notice of Federal Tax Lien is filed and attached to the taxpayer’s assets. Starting in 2018, credit reporting agencies stopped including federal tax liens on credit reports, but this does not mean a federal tax lien no longer factors in obtaining credit or gaining employment.

    Need Help Clearing an IRS Tax Lien?

    If an IRS Notice of Federal Tax Lien is encumbering your property, credit, or business financing, an administrative withdrawal under Form 12277 or Form 14135 lien discharge are two options available to taxpayers. Have your IRS transcripts, statutory deadlines, and withdrawal/discharge eligibility reviewed directly by an independent CPA.

    👉 Request an IRS Lien Diagnostic

    How is the Federal Tax Lien Released?

    Once the taxes attached to the lien are paid, the IRS will file a lien release in the same jurisdiction where the federal tax lien was originally recorded.  The lien release acknowledges the lien has been paid off.  The caveat is even though the taxes are no longer owed, commercial credit agencies and background check agencies still report the lien and the release in their reports to clients.  For example, a business wants to establish a credit line with a vendor and has paid off the tax lien.  The business will still have to explain the lien history before credit can be approved.  Another scenario is an employer performing a background check on an applicant for a financially sensitive position.  Even though the lien release has been filed, the background check agencies still report the original lien.

    Does a Tax Lien Withdrawal Remove the Lien?

    The internal revenue code allows taxpayers to be able to wipe a federal tax lien from their records completely as if it was never filed.  The request is submitted on IRS Form 12277. The qualifications include a lien was filed prematurely or incorrectly, the taxpayer is under an installment agreement that did not call for a tax lien, the taxpayer has established at least a 60 month direct debit installment agreement for a lien under $25,000 or less, withdrawal would allow the taxpayer to collect funds to pay off the lien, or the lien has been released for longer than three years and the taxpayer has been in compliance for the past three years.   If a tax lien is withdrawn under the vendor credit and employment scenarios mentioned previously, the background screening agency will report as if a lien was never filed. 

    Why Isn’t a Tax Lien Withdrawal Used When Trying to Sell Property?

    Another option for a lien removal is a lien discharge.  The request is submitted by completing IRS Form 14135.   This option is appropriate for sale of property that is being held up because of the lien.  The difference between a lien withdrawal and lien discharge are the actions the IRS takes to remove the lien.  After Form 14135 is approved, the IRS will issue a conditional commitment to discharge the lien and allow the property to close.  If the closing does not pay the lien in full, the lien will remain active and is then attached to either other property or the property owner.  The qualifications for the lien discharge include the value of the taxpayer’s remaining assets are twice the amount of the lien (the IRS is sure it can collect the lien from the remaining assets), the proceeds from the sale cover the lien, and the property being sold has no value. 

    Lien Release, Withdrawal, and Discharge Summary

    • Lien Release – the federal tax lien is paid off and the IRS files a lien release.  The lien and the release still show in credit reporting agency reports.
    • Lien Withdrawal – the IRS will remove the tax lien from the taxpayer’s record as if the lien was never filed.  The lien and release will not show in credit reporting agency reports. For more information on lien withdrawals, check out my lien withdrawal Form 12277 overview and Form 12277 step by step guide.
    • Lien Discharge – the IRS will conditionally remove the tax lien from a property for it to sell. Check out my lien discharge Form 14135 overview.

    Get the Right Legal Document to Clean Your Record

    Navigating the difference between an IRS release, discharge, and withdrawal requires precise planning to protect your assets and credit worthiness. Don’t leave your financial footprint to chance. Andris Financial Services is a CPA firm authorized to assist any taxpayer dealing with an IRS lien. Contact me today to find the right path forward!

    Submit your case details below for a confidential same day review.

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    IRS Lien vs Withdrawal vs Discharge FAQ

    What is the difference between an IRS tax lien release and a lien withdrawal?

    An IRS tax lien release (Form 668(Z)) occurs after your tax debt is satisfied or legally expired and confirms you no longer owe the balance. The original Notice of Federal Tax Lien remains visible in public county deed records as a past filing. An IRS lien withdrawal (Form 10916(c)) formally rescinds the public recording treating the lien as if it was never filed.

    Once I pay my IRS tax balance, does the federal tax lien go away automatically?

    No. The underlying debt is resolved, but the public filing does not disappear on its own. By law, the IRS must issue a Certificate of Release of Federal Tax Lien within 30 days of receiving full payment or approving an acceptable bond. The IRS sends this release to the county clerk to mark the debt satisfied, but the historical record of the lien filing remains in county deed books unless you formally apply for a lien withdrawal via IRS Form 12277.

    Does the IRS notify you when a tax lien is released or removed?

    Yes. When a lien is paid off, the IRS mails a copy of Form 668(Z) (Certificate of Release of Federal Tax Lien) directly to your address of record, while also filing a copy with the local recording office. If you subsequently apply for and receive an approved lien withdrawal, the IRS issues Form 10916(c) (Withdrawal of Filed Notice of Federal Tax Lien) to you and the county clerk.

    What does it mean when an IRS notice says a tax lien has been released?

    A tax lien release means the IRS has extinguished its legal claim against your current and future assets because the underlying liability was fully paid, an offer in compromise was completed, or the collection statute expired. While it stops collection action and frees your assets from the government claim, it serves as a receipt rather than an expungement of the public filing.

    Why is an IRS lien withdrawal preferred for credit repair and financing over a standard lien release?

    A tax lien release confirms your tax debt is satisfied, but leaves the original public notice recorded in county land records, where manual underwriters, title companies, and background check services can still see the past delinquency. An IRS lien withdrawal (Form 10916(c)) formally rescinds the public recording, legally treating the lien as if it was never filed. This removes the cloud on your public record and allows lenders to proceed without penalizing you for an old filing.

    If the IRS placed a lien on my house or property, how do I get it removed after paying it off?

    Once paid, the IRS files a Certificate of Release with the county recording office where your property is located, updating the title to show the debt is satisfied. To completely clear your public deed history for future sales, refinancing, or credit checks, you can submit IRS Form 12277 to request a full withdrawal. Under IRS policy, if the lien has been released and you maintain clean tax compliance for the prior three years, the IRS can formally withdraw the public filing.

    Does receiving a Form 1099-C eliminate an IRS federal tax lien?

    No. Form 1099-C reports canceled debt from commercial lenders (such as credit cards or private mortgages) for income tax purposes and has no legal authority over federal taxes. The IRS only releases or withdraws an internal tax lien through official certificates specifically Form 668(Z) for a release or Form 10916(c) for a withdrawal after the tax debt is paid, settled, expired, or administratively rescinded.

  • Can the IRS Seize Personal Assets for LLC Payroll Taxes? Navigating The Trust Fund Recovery Penalty.

    Can the IRS Seize Personal Assets for LLC Payroll Taxes? Navigating The Trust Fund Recovery Penalty.

    What is the Trust Fund Recovery Penalty (TFRP)?

    The Trust Fund Recovery Penalty (TFRP) is based on Internal Revenue Code 6672, a statute that addresses the failure to collect and pay employment tax or the attempt to evade the tax and facilitates the collection of unpaid LLC payroll taxes. The TFRP serves as an alternative means of collecting unpaid payroll trust fund taxes when taxes are not fully collectible from the LLC that failed to pay the withheld taxes. The IRS uses this rule to bypass the company and collect the money straight out of personal pockets. The TFRP serves three purposes:

    • It encourages prompt payment of income and employment taxes withheld from employees and other collected taxes;
    • It makes the responsible person liable for 100% of the unpaid trust fund taxes; and
    • It facilitates collection of trust fund taxes from secondary sources.

    Who Counts as a Responsible Person Under IRC Section 6672?

    A responsible person is anyone required to collect, account for, and pay over taxes held in trust who willfully fails to perform any of these activities. In an LLC, this can include LLC members, managers, officers, directors, or anyone who has check-signing authority and the power to decide which creditors get paid first. The TFRP may be imposed for:

    • Willful failure to collect tax,
    • Willful failure to account for and pay tax, or
    • Willful attempt in any manner to evade or defeat tax or the payment thereof.

    Responsibility is a function of duty, status, and authority therefore the IRS can and will seize personal assets for failing to pay payroll taxes.

    What Happens if You Receive IRS Letter 1153?

    Letter 1153 explains that the IRS’s efforts to collect the federal employment taxes due from the LLC named on the letter have not resulted in full payment of the liability. Therefore, the IRS proposes to assess a penalty against responsible person.  The responsible person has 60 days to respond to Letter 1153 and can take the following actions in response to the letter:

    • Agree to the assessment.  If the responsible person agrees with this penalty for each tax period shown, they are asked to sign Part 1 of the Form 2751 which is enclosed with Letter 1153 and return it to the office that sent the letter.  The IRS will then prepare and send Letter 1155, Notice of Agreed Trust Fund Recovery Penalty, and deliver the letter to the responsible person no later than 14 calendar days after receipt of signed Form 2751.  The Trust Fund Recovery Penalty is then moved to the responsible person’s personal account.  At this point, the responsible person can negotiate a payment plan, offer in compromise, or request the penalty be moved to currently not collectible status.
      • Because responsible persons could change their minds after signing Form 2751 (and therefore request Appeals review before the deadline listed in Letter 1153), the IRS does not treat a case as agreed until the 60 day deadline expires. A responsible person’s signature on the Form 2751 does not extinguish their appeal rights.
    • Appeal the proposed assessment.  If the responsible person does not agree, they can submit a request for appeal to the office that sent the letter. Letter 1153 contains information and lists IRS publications on how to file an appeal/protest.  The responsible person should file their protest within 60 days from the date of Letter 1153 to appeal this decision with the Independent Office of Appeals.
    • Provide no response. This is also called an Unagreed Case.  If the responsible person does not respond to the letter in 60 days, collections activities will proceed including filing a Notice of Federal Tax Lien and seizing personal assets.

    When Does the IRS Seize Personal Property for Unpaid Payroll Taxes?

    Forming an LLC or corporation protects personal assets from ordinary commercial debts, but that liability shield ends when business payroll taxes go unpaid. When a business fails to remit payroll taxes, the agency uses the Trust Fund Recovery Penalty to bypass the entity shield and convert the business debt into a personal tax liability.

    How the IRS Reaches Personal Assets

    • Personal Assessment (IRC § 6672): A Revenue Officer assesses the unpaid trust fund taxes directly against individuals who had check-signing authority or financial control (responsible person) and chose to pay other operating expenses ahead of the IRS). Once assessed, the debt attaches to your personal Social Security Number.
    • Liquid Assets Come First: Before seizing physical property, the IRS initiates administrative levies including freezing personal checking and savings accounts, garnishing wages, or intercepting accounts receivable.
    • Physical Property Seizure (IRC § 6331): If liquid levies fail to cover the liability and no payment resolution is established, a Revenue Officer can seize titled personal assets, including vehicles, secondary real estate, and business equipment.
    • Primary Residence Protections: Under IRC § 6334(e), the IRS cannot seize a personal primary residence without first petitioning a U.S. District Court judge and demonstrating that all other collection remedies have been exhausted.

    Ready to Get Help With The IRS?

    If you received IRS Letter 1153 or are trying to figure out how to handle Form 2751, do not treat it as a routine business tax issue. The IRS is actively trying to pierce your LLC protection and hold you personally liable for unpaid LLC payroll taxes.

    I will review your payroll records, evaluate your personal financial exposure, and protect your individual assets before the statutory 60-day deadline locks you into a permanent assessment.

    Submit your case details below for a confidential same day review.

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