Posted by Tiffany Gaskin

Removing Tax Liens From a Credit Report & What it Means

Removing Tax Liens From a Credit Report & What it Means

As of April 2020, tax liens are no longer included in a credit report. This decision is due to the fact that they usually contain judgments that were wrongly reported.  However, it is possible for the reintroduction of this policy in the future. 

This article gives you the steps involved in removing tax liens from your credit score and also explains its potential effects on your finances. This guide is a helpful resource for those who currently have tax liens on their credit reports.

 

What are Tax Liens? 

When a person refuses to pay his or her tax to the state, federal government, or county, the authority will make a legal claim on the defaulter's property; this is known as a tax lien. In other words, it is a legal claim on the property of those who fail to pay tax to the appropriate authority. 

The government can also file a tax lien against citizens who delays their tax payment. In such a case, the government has the legal right to garnish the defaulter's wages or make a claim against their asset or property. 

At the county level, tax liens are placed when you default on property and income taxes. You can be served a tax lien at the federal level if you don't pay your income taxes. 

Bear in mind that tax liens do automatically mean that the government will sell your property; it only gives the government an edge over other creditors. You won't be able to sell your assets or benefit from refinancing if a tax lien is filed against you. 

Furthermore, you should note that a tax lien does not only cover all the assets or properties you own when it is being filed. Legally, it can extend to other assets or property you acquire at a later time, provided you have not cleared your debt. 


What you Need to Know About Filing a Tax Lien

If you fail to pay your tax, the IRS will send you a letter telling you the amount you and also request you to pay all your debt. You will be sent several letters that detail what you owe; this usually takes place within a period of six weeks. 

You will be notified of the federal tax lien if you still fail to settle the tax debt. The IRS will send you a “Notice of Federal Tax Lien” by mail. Apart from that, it will also be included in a public record by filling it in your local courthouse. 

A lot of people cannot tell the difference between a levy and a lien.  There is a clear distinction between the two; a levy is the seizure of a defaulter's property, while a "claim" on your asset or property is referred to as alien.  You can remove the lien by settling your debt before it gets to the levy stage.  At this stage, the defaulters will have their assets and wages seized

How to Remove Tax Liens from Your Credit Reports? 

As mentioned earlier, tax liens are no longer included in credit history; this change resulted from the remarkable efforts of the Consumer Financial Protection Bureau and the National Consumer Assistance Plan. The top three credit reporting agencies, including Equifax, Experian, and Transunion, agreed to comply with the Fair Credit Reporting Act. Therefore, a lot of time spent amending old data due to tax liens removal. 

Furthermore, if your credit report still reflects a local, state, or federal tax debt, you can remove these tax liens by contacting the following agencies: 

  • Experian 

  • Equifax 

  • Transunion 

Conclusion 

If you aim to settle your tax debt, confirm your tax debt from the appropriate federal or state tax office.  The IRS might allow you to set up a payment plan.  You are advised to stick to this plan once you make an agreement to that effect. 

In some cases, you might need a credit repair specialist's services to remove a tax lien and other unfair items that might impact your credit score negatively.


FOR MORE INFORMATION ON HOW TIFFANY GASKIN CAN HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.


THANKS FOR VISITING.

Tiffany Gaskin
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