Does the IRS ever allow another debt to take priority over the IRSs lien?
Yes. A lien subordination is the IRSs agreement to permit another lien (e.g., mortgage or other security interest) to take priority over the IRSs lien. (The IRS simply agrees to allow another debt secured by the taxpayers property to be paid before the tax covered by the IRSs lien when, otherwise, the IRS would have a legal right to collect the tax covered by its lien first.) The typical situation for lien subordination is the purchase of a home when the IRS has already filed a lien against the taxpayer. A lender is not likely to provide the taxpayer a mortgage loan unless the lenders security for the loan (e.g., mortgage or deed of trust) is placed ahead of the IRS. Generally, the IRS may subordinate its lien if subordination is determined to increase the amount the United States may realize or the collection of the tax liability will be easier. Also, IRS may subordinate its lien if the taxpayer pays an amount equal to the interest to which subordination is requested.
