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Home Bankers Factoring Tax Lien Solutions

Bankers Factoring Tax Lien Solutions

Invoice Factoring Solutions with Unpaid Tax Problems

IRS Tax Lien Subordination and Invoice Factoring

Subordinate Your IRS Tax Lien to Bankers Factoring

Factoring With Tax Issues
Tax Lien Factoring from a DIP Financing Lender

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Can Invoice Factoring be Used with Tax Liens?

Forty-five days after the IRS files a Notice of Federal Tax Lien (NFTL), the government has a priority interest in your Accounts Receivable (A/R). What does this mean? If the IRS chooses to issue a levy to your A/R, your customer must pay the IRS rather than your lender with their valid UCC filing. But hope is not lost; you can get an IRS tax lien subordination and get funded by Bankers Factoring even though you don’t qualify for small business loans programs.

Your collateral is gone, your income will be cut off, and your factor (or another asset-based lender) will attempt to collect out. As small business owners, if your factor/lender sees tax trouble coming ahead, you can expect them to get very jumpy and threaten to cut off your funding. They would do that rather than wait to find out what happens with the IRS. Paying taxes becomes even more problematic. As a result, you might consider bankruptcy as an option to get relief from your cash flow problems or a personal loan at an exorbitant interest rate. However, we can help you with both a state and a federal tax lien subordination, and back taxes.

Why does a Factoring Company want tax documents?
Bankers Factoring Tax Lien Solutions

Any internal revenue service (IRS) tax debt must be resolved quickly and efficiently if you rely on A/R lending to fund your business. Ideally, you will be able to find a solution to your business taxes before the IRS files a Notice of Federal Tax Lien (NFTL). It’s also ideal that you do so before your lender finds out. But it doesn’t always work out that way, especially if you have a traditional bank loan and your lender finds out you have delinquent taxes.

What can your lender do?

Your lender may run routine public record searches on you and/or your business as part of their business loan due diligence. They may even be savvy enough to check your IRS records to uncover tax problems before they reach the NFTL filing stage. Today’s lenders are getting increasingly sophisticated in their approval and monitoring practices. If they discover a tax debt or other issue, the lender will pressure you and your business to pay the total tax debt. They may even compel you to hire a tax resolution company with whom they have a business relationship.

If you have an SBA loan and need help with taxes, please read funding with an SBA loan in place. We have experience in getting both IRS and SBA subordinations.

It is possible to survive an IRS tax lien with your factoring agreement in place. But you must act fast. Secure an IRS Installment Agreement and Subordination of the tax lien to your factor agreement as soon as possible. It also helps to communicate your payment plan to your lender successfully.

The Tax Lien-Factor Solution

Bankers Factoring has decades of combined, in-house experience dealing with IRS tax lien, tax liability, and subordination agreement issues. We are also a leader among invoice factoring companies for legal claims, tax levies, and cash advances, even with taxing authorities filing a lien.

Pre-Tax Lien – IRM 5.12.2.4 (11-09-2015) specifically identifies factoring in an example to demonstrate when it is appropriate to Defer the NFTL Filing (example B under “Following are examples of when it is appropriate to defer the filing of an NFTL:”). If you catch your Revenue Officer before they file a tax lien, refer to this section of the IRM and request that they defer the filing of the NFTL. If they deny your request, you may speak to their Group Manager and file a Collection Appeal Program (CAP) request.

Step 1 of your tax problem solution.

Installment Agreement (IA) – IRM 5.14.1.5 (03-04-2011) states that the IRS cannot levy assets while a formal Installment Agreement (IA) to satisfy the tax debt is in place. An IA acceptance letter from the IRS will allow your lender to keep the money flowing through accounts receivable financing so you can pay your payroll taxes and your employees.

Step 2 of your tax problem solution.

Subordination – The IRS will consider subordination of its lien position on your A/R to your invoice factoring company or other asset-based lenders. The Subordination adds another layer of protection when one pairs it with the Installment Agreement. The lender will remain in the first position on all A/R used as collateral while the IA and Subordination are active. This prevents your lender from having to compete against the IRS for funding receivables while the Subordination is in effect on the old tax liabilities as part of your repayment plan against your tax levy.

If you don’t secure an IRS Subordination, you risk the IRS, because of old federal income taxes, going after the A/R that you used as collateral and funded if the Installment Agreement defaults. IRM 5.12.10.6.1.1 (09-30-2015) provides specific guidance on Subordination to Factoring Agreements and having a direct debit installment agreement. We can help with the correct IRS form and get your estimated tax payments under control.

IRS notifications about your taxes

The IRS Subordination Agreement indicates that the IRS will notify the involved parties in writing in the case of default of the Installment Agreement. This should also give your lender peace of mind that they will not be left in the dark. You will sign form 8821, Tax Information Authorization, for your lender to submit to the IRS. It will allow your lender to receive copies of all IRS correspondence sent to your business about any tax bill.

Having cash flow and tax liability issues and don’t know where to turn? Bankers Factoring can help get you funded AND help deal with federal and state taxing authorities. Having the IRS tax lien remaining is OK because now you are on a payment plan and still getting funded by Bankers, even with damaged personal finance and a bruised credit report. Factoring is cheaper than credit cards. Let’s get started today with one of our B2B or B2G financial products.

When a business owner has tax obligations, it can be tough to grow your business. Bankers has dealt with unpaid tax issues since 1998 and can help with your business growth.

Ready for the owner-employees of Bankers Factoring to fund your entrepreneurial dreams even with IRS Tax Liens and Tax Issues? Call 866-598-4295 or go to Bankers-Factoring-Application.

Disclaimer: We are not CPAs or attorneys, and this article should not be considered legal advice. Please consult a tax attorney, tax accountant, or tax professional if you need advice.

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