Form 14134 - Certificate Of Subordination Of Federal Tax Lien Page 2
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7Section 7 - Basis for Subordination
Section 8 - Description of Property
1.
Enter a detailed description of the collateral you will use
A subordination may be granted under Internal Revenue
for the loan or other financing. This is the collateral on
Code (IRC) 6325(d)(1) or 6325(d)(2). Review the informa-
which you want the lien interest subordinated to the loan
tion below and select the section which best applies to your
or financing. If this is real estate, you must provide the
subordination request. If the IRS does not agree with your
legal description.
selection after its review, an explanation of the decision will
be provided.
2.
When the property is real estate include the type
of property. For example, 3-bedroom house; etc.
6325(d)(1) - a subordination may be issued under this
When the property is personal property include serial
section if you pay an amount equal to the lien or interest
or vehicle numbers, as appropriate. For example,
to which the certificate subordinates the lien of the United
2002 Cessna twin engine airplane, serial number
States. The following example uses an 80% loan to value
AT919000000000X00; etc.
and a 3% closing cost to financing ratio.
3.
Provide the property’s physical address if it is real estate
Example:
or provide the physical address where the property is
located, if it is personal property.
Current/New
Original
Fair Market Value
$200,000
N/A
4.
Check the appropriate box to indicate whether you
Refinance
$160,000
$145,000
attached a copy of the title or deed to the property.
Closing Costs
$
4,800
N/A
Section 9 - Appraisal and Valuations
United States Interest
$ 10,200
N/A
1. Check the “Attached” box after “Appraisal” to indicate
In this example the United States’ interest is the equity
whether you have attached an appraisal completed by a
you obtain from your refinanced loan after paying off the
disinterested third party. This is typically a professional
existing loan of $145,000 and paying the closing costs
appraisal providing neighborhood analysis; descrip-
to obtain the loan. ($200,000 property value x 80%
tion of the site; description of the improvements; cost
loan to value ratio = $160,000 refinance loan amount.
approach; comparable sales; definition of market value;
$160,000 - $145,000 loan payoff = $15,000 potential
certification; contingent and limiting conditions; interior
equity. $160,000 x 3% = $4800 closing costs to obtain
and exterior photos of the property; exterior photos of
the loan. $15,000 potential equity - $4,800 closing costs
comparable sales used; comparable sales location map;
= $10,200) The IRS would ask for $10,200 in return
sketch of subject property showing room layout; flood
for the United States subordinating its interest to the
map and qualifications of the appraiser. This type of
refinanced loan. The lien remains on the property but
appraisal is not required for a certificate of subordi-
the refinanced loan has priority over the lien.
nation.
4. 6325(d)(2) – a subordination may be issued under this
2. Check the appropriate box under the “Or One of the
section if the IRS determines that the issuance of the
Following Valuations” section to indicate which type of
certificate will increase the amount the government
property value verification is attached with your applica-
realizes and make collection of the tax liability easier.
tion.
This might involve a refinance to a lower interest rate
which would, if the subordination were granted, allow
Section 10 - Federal Tax Liens
a larger monthly repayment rate on the tax liability. Or
the situation might be more complex. For example, AAA
This section is important when the applicant and the
Auto Sales currently pays the IRS $2000 per month on
taxpayer are different. If the applicant and the taxpayer are
a $120,000 tax debt. Their inventory needs replenish-
the same, this section may be skipped.
ing but their wholesaler is reluctant to provide added
inventory because of the federal tax lien. AAA requests
1.
Check the “Attached” box if you have attached copies of
subordination and provides the IRS with documentation
the lien(s) with your application.
that an inventory replenishment of 500 cars could allow
2.
If you checked the “no” box list the System Lien Identi-
them to increase their monthly payment to $3000 as
fication Number (SLID) found in the top right hand box
well as increase their pay back rate to bi-weekly. In this
of the lien document, if available. If you do not have the
example the United States’ interest would be second on
numbers enter “unknown” in the first box.
the new inventory, if the subordination is granted.
For applications under section 6325(d)(2), complete
Section 11 - Proposed loan agreement
and attach a signed and dated statement describing
1.
Check the “attached” box if you have attached the
how the amount the United States may ultimately realize
proposed mortgage contract and describe how subordi-
through this subordination will increase and how collec-
nation is in the best interests of the United States
tion will be facilitated by the subordination.
2.
If you checked the “no” box, describe how subordination
5. 6325(d)(3) - Questions and applications for this section
is in the best interests of the United States.
refer to
Publication 1153
for instructions.
Publication 784 (Rev. -2010)
Catalog Number 46756T
Department of the Treasury Internal Revenue Services
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