# Equipment Financing with Active Tax Liens

Canonical URL: https://fundmyequipment.com/learn/credit-tier/active-tax-liens/
Last modified: 2026-05-29T19:39:17+00:00
Type: efin_credit_tier

## Summary

Equipment financing for buyers with active IRS or state tax liens. Subordination requirements, payment plan dynamics.

## Content

Active federal or state tax liens severely limit equipment financing options. Most prime lenders decline outright. Specialty lenders can sometimes approve if the lien is in a formal payment plan with the IRS or state, or under specific circumstances.

Why tax liens are flags
A tax lien gives the IRS or state a senior claim on all the business's assets. If the lender funds equipment financing while a lien is active, the IRS's claim is senior to the lender's UCC-1. In a default scenario, the IRS can claim the equipment ahead of the lender.
Federal tax liens (NFTL) are filed publicly; they appear in UCC searches and lender databases. State tax liens are similar.

What works
Some paths can get you approved despite an active lien:

IRS Installment Agreement: if you are in a formal payment plan with the IRS (Installment Agreement or Offer in Compromise), some specialty lenders will lend
Subordination: the IRS can subordinate its lien to a specific new loan (Form 14134). This is complex but possible
Released lien: if you have paid the tax debt and the lien is released (Form 668(Z)), it may still appear on records for some time but lenders treat released liens differently
Lien is for a small amount relative to your business revenue and the equipment value


What does not work

An active, un-subordinated, un-paid lien on a major prime equipment loan
Multiple liens (federal + state, or multiple state)
Lien plus other red flags (recent bankruptcy, NSF activity)


The right sequence

If you have an unpaid tax bill, set up an Installment Agreement with the IRS or your state's Department of Revenue. This stops collection action.
If a lien is already filed, request a Certificate of Subordination (Form 14134) for the specific equipment loan you need.
Once subordination is granted, apply for equipment financing with lien-tolerant lenders.
Continue paying down the tax debt; on payoff, the lien is released.


How we handle tax-lien applications
We route tax-lien applications to specialty lenders that consider them. Honest expectations: rates are at the high end of sub-prime, down payments are 25%+, and the lender may require copies of your IRS payment-plan agreement. Some applications will still be declined; we will tell you why if so.

Apply at /apply/; note the tax lien situation upfront to save time.