Posted in Blog  
  on Apr 21, 2015

How To Remove a Tax Lien From a Credit Report

There are some things that come around at the same time every year. The snows will melt. The flowers will bloom. The government will tax you. We might crack a smile at the sight of a blooming field of tulips, but most people don't smile when they have a tax bill in their grasp. Sometimes there just isn't money on hand to pay that tax bill. When that happens, a tax lien might be placed on your home or your other property. It becomes a debt that must be paid, whether you do it now or when you sell the property with the lien. When a tax lien appears on a credit report, it is considered a serious delinquency. It can dramatically lower a credit score. That's why knowing how to remove a tax lien from a credit report is important knowledge to have on hand.


How Does a Tax Lien Affect My Credit?

A tax lien can be a complicated debt. They come in many different forms and may include all of your assets or only some of them. A tax lien may be placed by a local government, a county government, state or national governments as well. There may even be multiple tax liens that are on some or all of your assets. The implications of just one tax lien can be enormous, especially when considering the credit report. They can last indefinitely and will show up as part of the public record. There can be legal implications involved as well. Removing a tax lien from a credit report must become a top priority.

How Can a Tax Lien Be Removed?

The most important thing to do is to pay the debt that is reflected by the tax lien. Any outstanding long-term debts will have a negative impact on a credit report. It is also important to note that if a tax lien has been legitimately placed on a personal credit record, it may stay there for up to 7 years after the debt has been paid in full. Sometimes a tax lien remains on a credit report even though it has become outdated. There may also be an improper tax lien on the credit report that needs to be disputed. Both of these situations are taken care of by the same response: a written request must be made of the credit reporting agency to dispute the validity of the tax lien. Even if an email written request is allowed, it should always be followed up with a written request. All disputes must be investigated. If the tax lien is outdated, then the credit reporting agency should remove the tax lien in 30-60 days in most instances. If the investigation determines that the lien is valid, however, it will remain on the credit report until the debt has been eliminated and the waiting time has expired. Inspecting your credit report frequently and disputing errors that exist immediately will always be your best defense.

What If a Tax Lien Is Withdrawn?

Sometimes a tax lien will be withdrawn. This typically occurs when the IRS has filed for a lien, but then the tax obligation has been paid. Liens may also be withdrawn if they were filed in error or a property owner can prove that they paid their property taxes in a timely manner. Even though the lien is withdrawn, it may still remain on the credit report. In this instance, you may need to dispute the lien or request for the lien to be removed through the FDIC if it still remains on your property and you can prove the payments have been made. The bottom line is this: tax liens should be avoided at all costs. Not only will they create a negative impact on your credit report, but they can limit the future financing options you may have available to you for the next 7 years or beyond. Understanding how to remove a tax lien from a credit report will help to manage a personal credit profile appropriately and eliminate errors when they occur. As part of the process, it is important to always stay in contact with the government agencies who may feel like a tax lien is necessary. Have a credit counselor or tax attorney on retainer as well to handle difficult or disputed tax lien situations. By taking these actions, you will be able to take control of your credit profile and lessen the impact of a tax lien, whether it has been properly filed or not.


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