We received this question last week in the Credit.com forums:
Q: My husband was 1099′d in 2008 for income he allegedly received in 2004. He does not recall actually getting the 1099, but the the government did and filed a tax lien almost immediately. Although he paid the $500 immediately thereafter, the lien caused us both to take a hit on our credit report and I understand it remains on our credit report for 7 years. Is there anything we can do to have it removed from our reports? We’ve looked into disputing it with the credit bureaus but it is a legitimate lien so they simply verified it and it remains on there.
A: You have every right to be concerned – and furious. And I probably don’t need to warn you that your credit scores may have already dropped like a rock. Even worse, an unpaid tax lien can remain on your credit report indefinitely. Once it is paid, it will be removed seven years from the date it is satisfied. (Make sure your credit report lists it as paid.)
The National Taxpayer Advocate, Nina E. Olson, the “consumer watchdog” at the IRS has reported that unfair tax lien policies are one of the most serious problems facing taxpayers, and in many cases do more harm than good. It’s worth watching this video where she explains the problem:
My advice to you is to get actively involved in this issue. Tell your elected officials in Washington what’s happened, and ask them to get involved in making the IRS change its policies with regard to tax liens. There is no reason for the IRS to ruin your husband’s credit over a $500 tax bill – especially since he made good on it quickly.
Do you have a story or question about tax liens and your credit? Share it in the comments section below.