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Does a Tax Lien Impact Your Credit?

Tax liens no longer have an impact on your credit score. However, they could still be visible to some creditors and affect your ability to sell or borrow against your home.

Tax Liens Don’t Appear on Credit Reports

The three major credit bureaus agreed to remove all tax liens from their reports by April 2018. This was due to issues with incorrect tax lien information that were causing liens to show up on the wrong people’s credit reports.

If you had a tax lien on your credit report prior to this decision, you may have seen a small increase in your credit score. Now taxpayers don’t have to worry about a tax lien showing up on their credit report or damaging their scores.

Tax Liens Can Still Cause Problems

There is still a public record of any tax lien filed against you. These are generally made a county recorder’s office where you own real estate. Creditors who search these records could still see the lien filing.

If you want to sell your house, a potential buyer will know about the lien. You generally won’t be able to complete the sale unless you get the entire lien withdrawal or get the property discharged from the lien. There are several ways you can convince the IRS to withdraw or discharge a lien.

Liens can also be an issue if you want to refinance or borrow against your home. The general rule of “first in time, first in right” gives the IRS lien interest a superior claim to any creditors who later give you a loan. A creditor will not want to be in a junior position to a tax lien, so you may need to ask the IRS for a certificate of lien subordination.

Other Ways to Avoid the Lien

You can also avoid the lien by paying your tax debt in full or settling your debt using an Offer in Compromise. If you have a direct debit installment agreement and meet certain conditions, the IRS may agree to withdraw the lien before you pay off the full amount.

Contact a tax attorney if the IRS is about to file a tax lien against you or if you need to get rid of your existing tax lien.

The Gartzman Law Firm handles tax lien issues and other IRS tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney.