Clear an IRS Tax Lien From Your Credit

An neglected federal tax lien on ones credit report can cause serious problems with his or her credit. Liens are included in public records and have a substantial influence on your credit rating. The IRS is different from other creditors. They only give debtors ten days to fulfill a tax debt before notifying credit bureaus and creating a federal tax lien. Fortunately, you may be able to successfully have the tax lien eliminated.

Dispute Inaccurate IRS Liens Found In Your Credit File

An intense study conducted by the Public Interest Research Group of The United States revealed that nearly eighty percent of American citizens have mistakes on their credit files. Unfortunately, the mistakes you find may be more serious than an address that does not belong to you or the misspelling of your name. Some are even stunned when they find a federal tax lien placed on their credit file that does not belong to them.

A direct dispute is very effective for situations like these. Were you aware that the Fair Credit Reporting Act grants every consumer the opportunity to dispute inaccurate or unrecognizable information found in their credit reports? You can file the dispute with the tax lien by mail, on the phone, and even online. The Federal Trade Commission recommends that individuals file their dispute by mail because it is easier to furnish the credit bureaus with written documentation to support your claim in saying that the tax debt is not yours.

Make Payment On the Tax Debt and Endure the Reporting Period

Many people prefer to pay on their tax debt and give the IRS lien enough time to be removed from their credit reports. Annoying tax liens stay on your credit for a period of seven years after they are paid. Leaving a tax lien unpaid will result in it remaining on your report for fifteen years. This is a mistake that can hinder your chances of establishing a decent beacon score. It is advisable to pay it off in the beginning.

There is a small time period revolving around the ten-year mark where paying off your tax debt will lead to it staying on your credit for a longer time period. The lien can only be enforced for ten years unless the IRS renews it. This is highly unlikely, but it does happens on some occasions. Paying off the tax debt will result in it being on your credit for seven years thereafter. This can leave the tax lien on your file for seventeen years rather than fifteen.

Steve Patterson is an author for the site 2008 Taxes.