Tax Liens: What You Should Know

Though it happens every day, whether intentionally or unintentionally, not paying taxes owed to the IRS can allow the federal government to file a claim against you known as a tax lien. Though this claim does not immediately go onto your public records, and thus is initially referred to as a "statutory" or "automatic" lien, it will eventually become very public information and can and will be used against the person or business by credit reporting agencies.

How Does A Tax Lien Affect Me?

As soon as the IRS files a lien with your county, it can be available for credit card companies to view. It will affect your credit report and credit score negatively, which could make it difficult to open credit cards, make large purchases and more. You'll also have a hard time getting any of your credit extended.

How Can I Avoid A Tax Lien?

The only way to avoid having the IRS file a lien on you is to pay your owed taxes in full. There are many ways to settle your debt if you can't pay the cost up front, but you should always stay on top of your taxes and contact the IRS immediately if this is the case.

How do I Know I Have One?

You will receive a letter of notice from the IRS once a lien has been placed on any of your assets. You can also check your local courthouse to see your public records.

Can I Get Rid Of It?

Yes, you can get rid of your IRS tax lien by paying your owed amount in full. There are also options in which you can file an Offer in Compromise, which states that you do not currently have the entire amount but will come to an agreement of a payment plan or some other sort of compromise, depending upon circumstances. Tax liens can also expire after ten years of the initial billing if the IRS doesn’t refile them, but waiting for the bill to expire is extremely risky and harmful to your credit.

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