A tax lien affects every part of your life, but what you may not have known is that it actually can negatively affect your credit. It can cause your credit score to drop by dozens or even hundreds of points. And the effects of the lien won’t go away quickly.


Tax liens can appear on your credit report for an indefinite period. However, most credit bureaus will remove them after ten years. Once the tax lien gets paid and released, it must be removed from your credit report seven years after it got initially filed.

Not every taxpayer that has a tax lien knows about it. The Notice of Federal Tax Lien, or NFTL for short, is a tool that the IRS uses to tell your creditors that you owe a tax debt. If you’re not able to pay your tax debt, the IRS may file an NTFL. If you owe more than $10,000, the filing of the NTFL will be automatic.

When the NTFL gets filed, the credit reporting agencies will pick it up. Models of credit scoring don’t like tax liens, and the effect on your credit scores can be similar to bankruptcy, a wage garnishment, and other types of judgments. In 2013, the IRS filed over 300,000 NFTLs. It is a 50 percent decline in the 2011 numbers, but a lot of people are still affected.

Starting in 2011 and 2012, the IRS implemented a change called the “Fresh Start” initiative. This change is assigned to assist taxpayers who must deal with collection from the IRS. One of the changes involves a policy that allows some taxpayers to have their tax liens withdrawn even before the debt gets paid.

In 2013, the IRS issued almost 7,000 tax lien withdrawals. While all of this is perfect for the people who knew about the Fresh Start program, there are still plenty of taxpayers who don’t know anything about the program.


How To Take Advantage Of The Fresh Start Initiative


Even if you don’t pay the IRS everything you owe, you might qualify for the initiative if you owe less than $25,000 and have entered into a direct debit payment agreement with the IRS where payments get taken out of your bank account. You’ll need to meet other requirements, such as making at least three direct debit payments and not defaulting on any other installment agreement.


How To Have Your Tax Lien Withdrawn


If you think you can qualify, complete the IRS Form 12277 (Application for Withdrawal). If the IRS approves your request, Form 10916(c) (Withdrawal of Filed Notice of Federal Tax Lien) will get filed. This means that you will have an official notice of the removal of your tax lien. You can also submit the withdrawal of the tax lien to the credit reporting bureaus. At this time, any wage garnishment on your record should also stop.

Once all of the credit reporting agencies follow through with your request, they will withdraw the tax lien. Your credit reports and scores should return to normal. This is a fairly complex process. If you’re threatened with a tax lien or need help getting one removed, attorney Mary King can help. She’s helped thousands of customers by dealing directly with the IRS to get their problems resolved. Use the form below to sign up for a free meeting with Mary King. She will take a closer look at your situation and provide a plan for the best course of action. Don’t deal with 
the IRS on your own!