Imagine 5 or 6 years from now you have plans of buying a property or a new car but when you go for it and provide your financial details and credit report to the seller, he immediately cancels the deal with you. What went wrong was that your credit report had information about tax lien and it affected your credit score badly.
What is Tax Lien?
A tax lien is a legal claim that the government makes on your assets for not paying the taxes. It involves the governing agency securing any of your valuable assets to cover the tax payments you owe.
Once the tax lien has appeared on your credit report, it is most likely to cause damage to your financial reputation and you will face difficulty in doing business. You will not be able to apply for loans or credits and you will also face issues in conducting selling business because no one wants to buy from someone who has tax agencies chasing after them.
The second reason why tax lien hinders your dealings is that it represents your trustworthiness and how responsible you are. Having tax lien lowers your credit score which resultantly represents you as someone who cannot be trusted for making punctual payments or making payments at all.
How to remove a tax lien?
The best way to deal with a tax lien is having it removed from your credit report completely. If you have not paid the tax yet, then it is also good to proceed with full payment after talking to the government agency, but the only drawback here that the tax lien information would stay on your report for several years.
So, the first and foremost step that you should take in this situation is requesting your credit report. Then after analyzing it properly, you can take any of the following steps, depending upon your case.
You can opt for the withdrawal of tax lien and have it removed completely from your credit report. IRS deals with this withdrawal method such that the lien will go away from the report as it never existed before.
But this method does not come easy, as a taxpayer who has a huge tax amount due will have to meet certain requirements before the program can facilitate him or her. For details of such requirements, you can visit the IRS website to know what you need before choosing this option.
If you have paid the outstanding balance or have entered into an installment agreement with the agency, then you can have a tax lien released. This means that the agency will no longer have a claim on your asset or property. The lien can be released only within 30 days of the payment.
To sum it up, if you want smooth financial processing in the future, you must know how to remove a tax lien from your credit report. And for that purpose, further, read up on https://creditrepaircompanies.com/tax-liens/