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 If your credit report shows an outdated paid tax lien, you could file a dispute with the credit bureaus, just like you can for other credit report errors.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may apply in the case of a federal tax lien is to ask a credit bureau to remove your reported tax lien if it has been withdrawn by the IRS.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
467 People Helped

Helpful to 467 out of 506 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 :)

1 Contribution
277 People Helped

Helpful to 277 out of 312 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.

1 Contribution
158 People Helped

Helpful to 158 out of 184 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.

1 Contribution
48 People Helped

Helpful to 48 out of 54 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! 

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.

1 Contribution
13 People Helped

Helpful to 13 out of 14 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.

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?

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.

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