Letter 3477: Tax Lien Discharge or Subordination

The Letter 3477 is sent by the IRS to inform taxpayers about the status of their request for a tax lien discharge or subordination. A discharge removes the lien from specific property, allowing the taxpayer to sell or refinance it, while subordination allows another creditor to take priority over the IRS lien.

Key aspects of Letter 3477:

• Approval or Denial of Request: The letter will specify whether the taxpayer’s request for a lien discharge or subordination has been approved or denied. The IRS reviews these requests based on the taxpayer’s financial situation, the value of the property, and the impact on tax debt collection.
• Discharge: If a discharge is approved, the IRS will remove the lien from the specific property, allowing the taxpayer to sell or refinance it. The lien remains in place for other assets until the tax debt is fully paid.
• Subordination: If subordination is approved, another creditor (such as a mortgage lender) will take priority over the IRS in case of default, allowing the taxpayer to refinance or obtain additional credit.
• Next Steps: The letter will outline what the taxpayer needs to do next, such as providing additional documentation, completing the sale or refinance, or paying off the remaining tax debt.

The Letter 3477 is an important communication for taxpayers looking to manage or remove IRS liens on their property, and it provides guidance on how to proceed with their request.