Audit. Fines. Liens. These are words that can send chills down any taxpayer’s spine. Most people are aware about what to do if you get a fine or audit. However, many don’t know where to start if they get hit with a tax lien.
At Hacker Accounting we know how to handle a tax lien. Here’s what you should do if you get a lien on you.
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What Is A Tax Lien?
Tax liens, like so many other aspects of tax law, are complicated. The simplest way to describe them is that liens is the government placing a claim against some or all of you assets based on your failure to pay your tax debt on time. This can happen on a federal or state level. Liens can take on many different forms: They could be liens placed on properties and holdings you own, or on your car.
One of the most damaging aspects of tax liens is that they will show up as public records on your credit score. Few things can WRECK a sterling credit score like a tax lien.
How Do I Remove A Lien?
Most public records wipe clean after a set period of time. A tax lien is not like your driving record: It won’t go away after a few years to give you a clean slate. An unpaid tax lien will remain on your credit report indefinitely.
The best way to remove your lien? Pay your debt. The lien exists because you have a tax debt. Squaring that debt and getting clear of it is how you also get clear of your lien. But one thing to keep in mind about liens: Even if you fully pay off a lien, it may remain on your credit report for up to seven years from the date of your payment. If the lien is STILL on your report after seven years, you can file a dispute with the credit bureaus to have them remove it.
If you have a tax lien and don’t believe that you should have been subject to it, you can dispute it. You should only dispute it with the IRS if you have proof that you should not have had the lien imposed on you in the first place. If the IRS ends up withdrawing your lien, you’ll need to contact the credit bureaus and ask them to remove the lien from your report.
Do you have a tax lien or other financial emergency that you need to deal with? Give Hacker Accounting a call at 602-375-5251.