# Equipment Financing After a Tax Lien

Canonical URL: https://fundmyequipment.com/learn/after-tax-lien-equipment-financing/
Last modified: 2026-05-29T19:39:17+00:00
Type: efin_guide

## Summary

Equipment Financing After a Tax Lien. Comprehensive guide covering the topic in depth, with worked examples, current data, and cross-references.

## Content

Equipment financing with an outstanding tax lien is difficult but possible. Federal and state tax liens take priority over most other secured creditors, which scares lenders. Resolving the lien before applying produces the best terms.

Why tax liens hurt

Tax liens are priority claims against your assets:

Federal IRS liens can attach to all property you own or acquire
State tax liens have similar power within the state
Tax liens generally take priority over later-filed UCC liens
Lenders fear losing collateral to a tax authority's seizure


Result: mainstream lenders decline. Specialty lenders charge premium.

Options ranked by quality

1. Resolve the lien before applying (best)

Pay the full balance or negotiate a settlement. Once paid, the IRS or state issues a release. Wait 30-60 days for the release to clear public records, then apply.

2. Installment agreement with the IRS

Set up a formal installment agreement. The IRS does not necessarily release the lien but reduces lender concern. Many lenders accept applications from borrowers on documented installment plans, especially after 12+ months of consistent payments.

3. Lien subordination (sometimes possible)

The IRS can subordinate its lien to a new lender's lien in specific circumstances, allowing the new equipment financing to proceed. Requires IRS Form 14134 and approval. Process takes 30-60 days.

4. Apply with full disclosure to specialty lenders

Some specialty lenders accept active tax liens with very high down payments (30-50%), shorter terms, and significantly higher rates (18-25%). Limited options but real.

5. Wait until resolved

If financing is not urgent, resolve the lien first. Total cost is usually lower.

What lenders need to know


Lien amount and current status
Tax authority (IRS, state, local)
Payment arrangement in place (if any)
Plan for full resolution
Cause (one-time event, missed filings, dispute)


Hiding the lien is futile. Lenders run lien searches and find them.

State vs federal lien differences

State tax liens vary in priority and process. Some states are more aggressive than the IRS in pursuing assets. Some states have shorter or longer release timelines after payoff.

Federal tax liens are standardized. IRS publishes processes clearly.

Action steps


Identify all tax liens (federal, state, local) against your business
Calculate total balance and resolution cost
If possible, resolve before applying
If not, set up installment agreement and document payment history
Apply with full disclosure and resolution plan
Be prepared for premium pricing and high down payment