Removal of Liens on Credit Reports

“Can you get this tax lien removed from my credit report?” For many years, this has been one of the more common questions we hear from clients and potential clients at Haynes Tax Law. Some are people that have already resolved their tax problems and had the Notice of Federal Tax Lien released, but the credit reporting agencies (Experian, TransUnion, and Equifax) have, for many years, continued to report the past existence of a federal tax lien on a consumer’s credit report. But this may be about to change.

A consumer’s credit report is a historical document, provided to potential lenders to assist them in making decisions about a consumer’s credit-worthiness and risk. It contains information about current debts and open accounts, recent credit inquiries, and also a great deal of historical information. Most open accounts also include a payment history for six to twelve months, alerting potential lenders to any history of late or missed payments. Federal tax liens were included for the same reasons – to notify lenders of outstanding balances and a history of unpaid debts. The three credit-reporting agencies usually included a listing of federal and state tax liens, even if the underlying tax liabilities were paid in full or otherwise satisfied, for up to ten years after the liens were released. The process for having such liens expunged from the reports was usually long and unreliable, and involved obtaining a Certificate of Withdrawal from the IRS, having it submitted to the credit-reporting agencies, and then making sure that the Certificate was actually processed by the agencies and the lien removed from the credit report.

In recent years, consumer advocates have begun to fight back against the non-governmental credit-reporting agencies, most notably for the frequency of inaccurate information on many reports, and the difficulty of getting such inaccuracies fixed. It appears that such efforts have born some fruit. As recently reported, the three credit-reporting agencies will be more strict when selecting information for inclusion on a consumer’s credit report. Starting July 1, 2017, they will no longer include any records that do not include the consumer’s name, address, and either Social Security Number or date of birth. Neither the complete Social Security number or taxpayer’s date of birth appear on a Notice of Federal Tax Lien. Such information is also often missing from civil judgments in most jurisdictions in the United States. Some analysts believe that these new standards will result in past federal tax liens and civil judgments being eliminated from consumer credit reports.

Although TransUnion, Equifax, and Experian may be removing such entries from consumer credit reports, there will continue to be companies that gather, compile, and sell such information to potential lenders or others. LexisNexis has already announced that it will continue to make such information available to potential lenders and others. It will then be up to any potential lender if they think that such information, which may exist but will no longer be shown on the credit information they already pay for from the three credit-reporting agencies, is worth an additional subscription to LexisNexis. But for now, the possibility of having any history of federal and state tax liens removed from their credit reports may be of significant assistance to many with past or present tax problems.

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