Do tax liens affect one’s credit?

On Behalf of | Jun 19, 2020 | Tax Liens

Connecticut residents who owe money to the Internal Revenue Service may find that it tries to collect in ways that can be extremely harmful to one’s way of life. Tax liens, for example, offer the government the ability to claim an interest in one’s property. This means that, if tax debt is not paid, the IRS will have first dibs on seizing property so that it can be sold to pay the debt. Tax liens also have the ability to affect one’s credit, which may be good for some but can cause others to suffer further financial harm. 

Thankfully, as of April 2018, tax liens are no longer reported to the credit bureaus. Why? It is believed that liens and judgments were not always being reported correctly. Will things always stay this way? Only time will tell, as the policy can be changed at any time. 

Just because these liens are not reported to credit agencies anymore does not mean that one’s credit score will not be affected by the tax debt. One’s score may rise if the debt is paid off and money is now used to keep other accounts in good standing. One’s score may lower if lines of credit are taken to pay the tax debt. 

Regardless of whether tax liens are reported to credit agencies or affect one’s credit score, they are still something to take seriously. The sooner one tries to resolve the debt or seek to have the lien withdrawn, the better. Connecticut residents who need assistance dealing with tax liens can turn to an experienced tax law attorney who will be able to review their cases, offer guidance and, if desired, help them work with the IRS to resolve the situation as quickly as possible.