Just the sound of the words “tax lien” sounds frightening. And, to quote a line from the 1986 version of “The Fly,” someone who is looking at a tax lien on a credit report should “Be afraid. Be very afraid.”
Why? Because any lien, but especially a tax lien can wreak havoc with their finances for years to come and impact also every major financial transaction they make.
When Uncle Sam wants money the government is due, it can put a lien on a taxpayer’s property that will remain on a credit report until the debt is settled. An individual with this type of burden can’t expect to make any profit from liquidating their assets and in some cases their wages may be garnished also.
Having Uncle Sam “liening” on you, pretty much makes the individual dead in the water financially, so to speak. There we go again with that saying about “death and taxes.” Working with the Internal Revenue Service on repaying a debt can help in resolving the situation and thus in reducing how long it stays on a credit report.
As long this mark on a credit report remains, an individual will have difficulty with their finances when it comes to applying for:
• New credit cards
• Mortgages
• Refinancing
• Car loans
• Students loans
• Rental property
When working to minimize a tax lien stays on record, it is probably best to consult a tax attorney or tax accountant. As previously discussed, this is a serious matter and consulting a professional can help in dealing with the situation.
In order to remove the lien and clearing the record from the credit report, the individual must pay off the debt, followed by a seven-year period. But just because the debt has been settled and the seven-year period has passed, don’t assume that the tax lien has been removed from the credit report.
A taxpayer should take the time to contact the three major credit bureaus Equifax, Experian, and Trans Union, to assure a tax lien is no longer part of their credit report.
The individual might find that the tax lien might still be listed because it was not reported as being paid by the Internal Revenue Service or because a credit bureau did not take the time to update an individual’s credit report. Regardless of whether a lien still exists, finding out it is still there when an individual goes to apply for credit or make a major purchase may come as a very unpleasant surprise.
Getting the government to clear a credit report involves working after the fact to resolve the problem. The better solution is prevention. An individual should never allow a tax lien to be placed on their assets and that comes from doing whatever it takes for an individual to stay current with their tax payments.
Being timely with your taxes and your good credit are serious matters. Getting them intertwined is never a good idea. It is definitely something of which someone should definitely “Be very afraid.”
Frank Mather writes about taxes. He much prefers that over writing about the other sure thing in life, death. Frank also has a site where he covers many topics related to taxes like tax liens on credit reports. Visit his site today for a free tax guide – http://www.taxproblemshelp.com
kitchen deep cleaning Winnetka ..