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Tax liens and the far-reaching credit score implications

Many taxpayers who struggle with tax debt problems are also married and have children. In a previously blog we discussed IRS tax liens and situations that may result in a lien being issued against a taxpayer. For example, the IRS may take action to impose a lien against an individual's home, motor vehicle, bank account or business assets if he or she fails to pay tax debt. 

A tax lien can negatively impact an individual's credit score and therefore one's financial standing and ability to borrow money. Additionally, depending on whether an individual and his or her spouse file taxes separately or jointly, a spouse may also be directly impacted. 

In cases where an individual files separately from a spouse, a husband's or wife's credit score should not be affected. However, if a couple files their taxes jointly, both will likely suffer blows to their individual credit scores.

A tax lien and the related negative credit score implications can wreck havoc on an individual's and couple's ability to borrow money. This is turn can make it difficult to impossible to obtain a home, car or business loan.

When possible, individuals who receive communication from the IRS that they owe tax debt are advised to contact the agency and find a way to resolve the issue. In cases where a resolution or compromise is not reached and a lien is imposed, couples may choose to turn to a legal tax professional for advice, guidance and assistance.

An attorney will provide strong legal advocacy and represent one’s best interests while dealing with the IRS to resolve tax disputes as quickly as possible. 

Source: Nerd Wallet, "How Tax Liens Affect a Spouse’s Credit," Virginia C. McGuire, Sept. 11, 2015

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