Tax Liens and Your Credit Report

Tax Liens and Your Credit Report

Like clockwork every spring, rain pounds the pavement, flowers open up and tax assistance commercials take over our television sets. Although refunds can sometimes be reason to celebrate, nobody exactly leaps for joy when tax season rolls along. Unfortunately, if you choose to avoid your taxes, you may find that your oversight has left a negative impact on your credit. Missing your taxes can lead to tax liens, which are serious derogatory marks that may occur when you neglect or fail to pay a tax debt. Here’s some information and resources that may help if you’re dealing with a tax lien on your credit report.

What is a tax lien and how does it affect my credit?

Tax liens are complicated and vary in form and details depending on your individual situation. In essence, a tax lien is the government's claim against all or some of your assets based on your failure to pay a tax debt on time. They may occur at the state or local level, or at the federal level.

These liens come with many possible personal and legal implications. When it comes to your credit, they're important to pay attention to because they'll usually show up as public records on your credit report. Like other types of public records, tax liens have a significant negative impact your score.

How do I remove a tax lien from my credit report?

First, it's important to know that unpaid tax liens, unlike other public records, may remain on your report indefinitely.

Because of this, the best way to get rid of a tax lien is to pay your tax debt in full, though even then the public record of the tax lien may remain on your credit report for seven years from the date of payment. If your credit report shows an outdated paid tax lien, you could file a dispute with the credit bureaus, just like you can for other credit report errors. You could also dispute a tax lien on your credit report if you have proof that you should not have been subject to it in the first place.

Another option that may apply in the case of a federal tax lien is to ask a credit bureau to remove your reported tax lien if it has been withdrawn by the IRS. For additional details on how withdrawal works, as well as additional information about federal tax liens in general, visit the IRS website.

Bottom Line

Tax liens will significantly impact your credit history, so it's important to understand how they come about and what you can do to deal with them. Remember that since the laws regarding liens can vary, it's always smart to consult the proper resources, such as the IRS, your state or local tax authority, a tax attorney or a credit counselor. Take charge of your credit by paying your taxes promptly to avoid tax liens appearing on your credit report whenever possible.

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

About the Author: is the Communications Coordinator at Credit Karma. When she isn't writing her way through life, you can find her reading about the latest in entertainment and watching television almost every night of the week. Say "hi" @noodlemaine!

All Comments

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1 Contribution
478 People Helped

Helpful to 478 out of 518 people

Ok, here's some info:

1. the IRS doesn't have to contact you about liens - just the way it is! If you owe money, contact them first! They're much more helpful when you do :)

2. Tax liens might not be from the IRS, but from the state for unpaid STATE taxes. You need to check that out too.

3. If you're in a payment plan with the IRS - good for you for doing what needs to be done! They will help you - don't go to a debt consolidation company as it will ruin your credit for a long time. (been there, done that!)

4. This article is general info, not specific to your case - you have to be proactive and take care of it yourself.

Hope this helps :)

Reply by
kmmrs

1 Contribution
61 People Helped
Helpful to 61 out of 84 people

What steps do we take to take care of this.  Do we write a letter is there a website?

Reply by
TAHLV

1 Contribution
3 People Helped
Helpful to 3 out of 6 people

My wages are being garnished by a state in which I do not live but worked a decade ago.

I can find no judgment entered against me in either my state of the state garnishing my wages.

Is it required that a foreign state first obtain a court orderred judgment in the state they wish to garnish wages in? (ie, the state in which I live?)

My states Revised Statutes require a creditor to first obtain a court ordered judgment before garnishing wages. How or if this pertains to foreign states is a mystery however in reading my Revised Statutes, it makes no exception for foreign states ability to garnish without a judgment. 

Can you lend any pertinent information that may help me determine if this is legal or at least common?

Thank you,

Reply by
noeago

1 Contribution
54 People Helped
Helpful to 54 out of 72 people

This tax lien in this statement was deducted from my income tax returns in 2013 from the taxes of 2012-2013. I don't understand why this is even on my credit report. I recieved a letter on the dates above stating why the certain amount of money was deducted from my tax return, therefore I thought it had been resolved.

Reply by
redsox47

1 Contribution
5 People Helped
Helpful to 5 out of 7 people

great. I am on a payment plan. But it i was suprised to see it on my credit score though.

1 Contribution
279 People Helped

Helpful to 279 out of 315 people

i dont owe the irs anything at all,and what was owed in the past was taken directly from my refund, plus i didnt even know about a tax lien against me.

Reply by
Maddashell

1 Contribution
5 People Helped
Helpful to 5 out of 11 people

I was in the Navy when the state of California says I didn't pay my taxes.  I have sent them my tax returns and everything! And this is still on here.  I need to call the IRS cause this is a major mastake....

Reply by
lizzytu

2 Contributions
1 Person Helped
Helpful to 1 out of 2 people

i didnt know about the 2 tax liens against me, good to be able to see whats on your credit report. Right now is one of the hardest times concerning money, and i would not be able to even see this information about me. So i Truely Thank "Credit Karma" for being there for me when i really need'd it.  Ps. it was just like you said FREE  

Thanks  :)

Reply by
karlafood

1 Contribution
59 People Helped
Helpful to 59 out of 91 people

I do not owe any taxes.

Reply by
GHale1971

1 Contribution
113 People Helped
Helpful to 113 out of 145 people

Same thing happened to me. I owded the IRS back taxes from 2001 and they placed a 'lien' against property that I never owned, and took the debt that I owed from my tax returns, now it's paid off and this mark is STILL on my credit report.

Reply by
M714

1 Contribution
0 People Helped
Helpful to 0 out of 1 people

Everything was paid last year

Reply by
ARANROSALIND

3 Contributions
7 People Helped
Helpful to 7 out of 9 people

Sameway here I don't owe anything I have no idea why they reported me .I have kids they are always oweing me money ,not me ,I need help please what can i do ?

Reply by
1Mochaa1

1 Contribution
1 Person Helped
Helpful to 1 out of 1 people

this was a mistake from the irs. i use h&r block and they took care of this by writing a letter to straighten out the mistake of the irs because they gave the number we were soppust to use because of my disablity

Reply by
Debbiek722

1 Contribution
8 People Helped
Helpful to 8 out of 14 people

I do not owe the IRS, how do I get this removed?

Reply by
Dekanova

1 Contribution
0 People Helped

The exact same thing happened to me,  What do i do????  :(  

Reply by
slimgb

1 Contribution
0 People Helped

I don' owe a tax loan.I have not worked since 2006. William Staples

1 Contribution
159 People Helped

Helpful to 159 out of 187 people

I am not aware of any federal tax lien.  No notice has been received.  It would be more possible to address this if I I was made aware of it.

Reply by
sharleen19

1 Contribution
61 People Helped
Helpful to 61 out of 80 people

I am not aware of anything because I have not been informed.

Reply by
19pcga51

1 Contribution
54 People Helped
Helpful to 54 out of 68 people

Same happened to me; seems to be a pattern of which there is no excuse for NOT notifying. They have no problem notifying thr credit bureaus.

Reply by
Lfen1949

1 Contribution
1 Person Helped
Helpful to 1 out of 3 people

What did you do to clear it up?

Reply by
Moviebuff53

1 Contribution
0 People Helped

This is all new to me since I NEVER received ANY NOTICES, this is been placed on my credit report IN ERROR.  

Reply by
luvkarim

1 Contribution
1 Person Helped
Helpful to 1 out of 1 people

I was not aware of any tax lien because I never had any previous notice from them but as soon as I saw this on my credit history,I contacted them immediately and made a full payment, yet this is still on my credit history

1 Contribution
50 People Helped

Helpful to 50 out of 57 people

This is bull****, I paid my taxes that I owed already.  And it is still going to show for seven years!  Thats bull****!  This is why we need to reconstuct the IRS and some of there bull**** rules.  But yet when the IRS makes a mistake with your taxes, they take there time to pay you back! 

Reply by
sunshine1965

1 Contribution
6 People Helped
Helpful to 6 out of 10 people

thats right

Reply by
ramireznoe0601

1 Contribution
18 People Helped
Helpful to 18 out of 20 people

Thats right that is bull s***. we pay them their money but we still keep on getting f*** for seven years.straight bull s***

Reply by
P1monsterbassin

1 Contribution
0 People Helped

I have a lein on my credit but the IRS owed me money yet it still shows a lein on my credit. Crooked *******s.

Reply by
slomoshn

2 Contributions
1 Person Helped
Helpful to 1 out of 1 people

You're right. It is bull****. But it's not the IRS, it's the credit bureaus that allow it to remain after paid. There are so many things allowed on a "credit report" that have nothing to do with "credit". It's now about control. 

If you disagree with the so called tax charge, you still get the seven-year screwing. 

1 Contribution
61 People Helped

Helpful to 61 out of 73 people

This has got to be a mistake.  I have never had a tax lien, nor was one ever brought to my attention.  Every single dime that I had owed the government has been paid through a withholding of a tax return.  What are they trying to pull here?  I will investigate this matter quickly.

Reply by
christina11280

1 Contribution
20 People Helped
Helpful to 20 out of 24 people

anyone have a cotact number to call and find out 

Reply by
jangeliii

1 Contribution
8 People Helped
Helpful to 8 out of 9 people

how do you investigate something like this?

Reply by
brochelle3

1 Contribution
0 People Helped

What did you end up doing to get the tax lien taken off? The State made a mistake and admitted that they made a mistake and withheld the taxes from my income taxes but somehow did not input the information on the computer. They sent me a reciept showing that the taxes have bee paid as of the date that i called, but really they were paid the whole time, and I never owed taxes. How do i get t his tax lien taken off of my credit?

1 Contribution
14 People Helped

Helpful to 14 out of 15 people

Until recently, tax liens remained on credit reports for seven years from the date they were paid or satisfied. But under the IRS Fresh Start program announced in early 2011, you can request that the IRS withdraw the lien if you have paid or satisfied the tax debt. This is not something that happens automatically. You must ask.

 The IRS sent me to thiswebpage for more information about the program, but would not supply any more details.  According to the instructions, taxpayers must fill out Form 12277 requesting that the lien be withdrawn. If it is withdrawn, the IRS will file the notice of withdrawal with the office where it was recorded and send you a copy. You can also request, in writing, that the IRS notify credit reporting agencies, creditors or financial institutions. It’s up to you to provide the addresses for those parties you want notified of the withdrawal.

1 Contribution
32 People Helped

Helpful to 32 out of 40 people

I also have not been made aware of any tax leins.  All taxes have been paid in full.

Reply by
lawilliams1973

1 Contribution
24 People Helped
Helpful to 24 out of 37 people

i called to and the tax people cant find anything... what do i do

1 Contribution
23 People Helped

Helpful to 23 out of 29 people

I have paid IRS all past taxes owed as of August 2013 Leon still shows up as unpaid wonder how long it will take IRS to show paid?

Reply by
Guerrerojarolis

1 Contribution
4 People Helped
Helpful to 4 out of 9 people

Ow much do I OwenOwen

1 Contribution
26 People Helped

Helpful to 26 out of 35 people

I have never had a tax lein..ever.  I don't know where this came from.

1 Contribution
19 People Helped

Helpful to 19 out of 23 people

I like many others never received any notice about a tax lien. I have not received a tax return in many years and would like to know how to go about getting this matter taken care of. Also how do I settle any other negative reports that are against me. I.e. how do I find out the company or collection agency that may have a collection hold against me. Thx in advance.

Top Contributor

Reply by
gatorman

12 Contributions
99 People Helped
Helpful to 47 out of 50 people

You need to first pull all 3 reports from experian equifax and transunion. You can do this once a year for free. at www.myfreeannualcreditreport.com That will show what accounts are in collection. And which collection agencies are holding those accounts.I would suggest you dont acknowledge the debt over the phone as this is being recorded and can start the clock again on old debts. Tell them to send any paperwork to you for review. Then negotiate a lower payment as settlement asking in writing to have it removed once the debt has been satisfied. Hope this gives you insight into your approach in addressing your credit ..

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