The Riverside real estate market has been a rollercoaster of equity growth. For many residents in Corona, Temecula, and Murrieta, their home is not just a place to live – it is their primary financial safety net. However, if you have unpaid back taxes, the IRS can lock down that equity with a Federal Tax Lien.

A tax lien is often called a “silent deal killer.” You may not even realize how severely it affects you until you try to refinance your mortgage to get a lower rate or attempt to sell your home. Suddenly, the title company flags the lien, and the entire transaction grinds to a halt.

Understanding the “Notice of Federal Tax Lien”

The IRS sends a Notice of Federal Tax Lien (NFTL) to the Riverside County Recorder’s office to alert creditors that the government has a legal right to your property. This is public record. It destroys your credit score and scares off lenders.

Crucially, paying the debt in full is not the only way to remove it. If you need to leverage your property immediately but cannot pay the full tax bill today, you have three powerful options:

1. Lien Subordination (The Refinance Saver)

If you are trying to refinance your Riverside home to get cash out or lower your payments, lenders will generally refuse if the IRS is in “first position.” The IRS “trumps” the new mortgage.

However, we can file for a Certificate of Subordination. We argue to the IRS that allowing the refinance is in their best interest because it either allows you to pay them a lump sum from the cash-out or lowers your monthly mortgage payment, making it easier for you to afford a monthly tax installment plan. If approved, the IRS steps back into second position, allowing the loan to close.

2. Lien Discharge (The Sale Saver)

If you are selling your home, the lien stays with the property unless it is “discharged.” Buyers will not purchase a home with an attached IRS lien.

We can apply for a Certificate of Discharge (Form 14135). This allows you to sell the property free of the lien. The catch? The IRS generally requires that they receive the proceeds from the sale up to the amount of the lien. However, we ensure that closing costs and senior mortgage payoffs are handled first, ensuring the sale actually goes through.

3. Lien Withdrawal (The Credit Repair)

This is the “Holy Grail” of lien removal. A withdrawal removes the Notice from public record as if it never happened. You generally qualify for this if:

• You owe less than $25,000.
• You enter into a Direct Debit Installment Agreement (DDIA) to pay off the debt in 60 months.
• You have made three consecutive payments.

Once we secure the withdrawal, we send the document to the credit bureaus to repair the damage to your credit report immediately.

Don’t Let a Lien Trap You

Navigating the Lien Unit of the IRS requires precise paperwork. A denied application can delay your real estate closing by months. At Kugelman Law, we prioritize these cases because we know real estate deals have strict deadlines. Contact us to clear your title and your name.

Life in the Inland Empire moves fast. Between rising mortgage rates in Riverside and the daily grind of commuting, falling behind on administrative tasks is common.

However, there is a massive difference between paying your taxes late and not filing a return at all. If you have unfiled tax returns from previous years, you are sitting on a ticking time bomb known as the Substitute for Return (SFR).

What is a Substitute for Return (SFR)?

The IRS does not wait forever for you to file. Eventually, their Automated Substitute for Return (ASFR) system will file a tax return for you. This is not a favor. When the IRS files an SFR, they:

• Include all income reported by third parties (W-2s, 1099s).
• Grant ZERO deductions or credits. No mortgage interest deduction, no child tax credits, and crucially for business owners, no business expense deductions.
• File as “Single” or “Married Filing Separately,” which usually results in the highest possible tax rate.

The result? A tax bill that is often 2x or 3x higher than what you actually owe. Once this assessment becomes final, the IRS can legally begin collecting this inflated amount through wage garnishments and bank levies.

The Risk to Riverside Homeowners

Riverside County has seen significant property value appreciation. This equity is a target. If you ignore an SFR assessment, the IRS can place a Federal Tax Lien on your home. This does not mean they will seize your house tomorrow, but it does mean:

• You cannot refinance your home to access equity or lower your rate.
• You cannot sell the home without the IRS taking their cut from the proceeds first.
• Your credit score will be severely impacted, affecting your ability to buy cars or secure business loans.

The Solution: Audit Reconsideration and Original Filing

The good news is that an SFR is not set in stone. At Kugelman Law, we help Riverside residents “replace” the government’s inflated return with an Original Return that tells the true story.

Step 1: Gather Your Documents

We start by pulling your “Wage and Income Transcripts” from the IRS to see exactly what they know about your income. Then, we work with you to reconstruct your valid deductions. For our business clients, this is where we save you thousands by properly documenting expenses the IRS ignored.

Step 2: File the Correct Return

We prepare and file your compliant tax return. This typically replaces the SFR assessment. We have seen clients whose “IRS-calculated” debt of $100,000 dropped to $15,000 simply by filing a correct return that included their valid business expenses and family credits.

Step 3: Negotiate the Balance

Once the correct (and lower) tax balance is established, we don’t just leave you to pay it. We negotiate a tax debt resolution plan, which could be an Offer in Compromise (settling for less than you owe) or a Partial Payment Installment Agreement based on your current ability to pay, not your past mistakes.

Do not let the fear of the unknown stop you from acting. The IRS is much more lenient with taxpayers who come forward voluntarily than those they have to hunt down. Contact the Kugelman Law tax experts today to get back into compliance.