In the world of personal finance, tax liens are a seldom-discussed topic. However, they can have a profound impact on your credit score and overall financial situation. It’s important to understand what tax liens are, how they affect your credit score, and what you can do if you find yourself dealing with one. In partnership with Clean Slate Tax, we’re here to provide you with a comprehensive understanding of this complex topic.

Understanding Tax Liens

A tax lien is a legal claim by a government entity against a person’s property when they fail to pay taxes owed. It allows the government to secure its right of claim over the property, assets, or financial securities of the taxpayer. Tax liens can be instigated by local, state, or federal government organizations.

Impact on Credit Score

Having a tax lien can negatively impact your credit score. Credit bureaus consider it a severe derogatory mark, on par with a bankruptcy filing or a collection. While the exact impact will vary based on several factors, the bottom line is the higher your score is to begin with; the harder you can fall.

Dealing with a Tax Lien: Clean Slate Tax

Fortunately, you’re not alone when dealing with a tax lien. Organizations like Clean Slate Tax are developed to guide individuals through such ordeal. A tax professional can negotiate with the IRS or state tax agency on your behalf, potentially reducing the amount you owe, and helping you set up a payment plan that works within your budget.

Applying for a Withdrawal

In certain circumstances, the IRS may withdraw a lien. A withdrawal removes the public Notice of Federal Tax Lien, and assures that the IRS is not in competition with other creditors for your property. However, you are still liable for the amount due.

Release of a Tax Lien

Once a lien is released, it means the IRS no longer lays claim to your property for your owed taxes. This normally happens once the tax debt is fully paid, or if the time period for collection has expired.

  1. Pay the tax owed in full.
  2. Set up and complete a payment plan.
  3. Prove that the tax lien was filed in error

Frequently Asked Questions

How soon can a tax lien be removed from my credit report?

Typically, tax liens remain in your credit report for seven years from the date they’re paid. However, the credit bureaus have stopped reporting tax liens, so it’s no longer a factor in your credit score.

Do tax liens show up on background checks?

Yes, unpaid tax liens often show up on background checks. This can affect your ability to secure a job, especially positions in the financial sector or other industries where financial responsibility is crucial.


Navigating the world of tax liens can be complex, but with the right knowledge and assistance, it doesn’t have to heavily burden you. Understanding your rights, potential impacts on your credit score, and possible solutions will empower you to tackle any tax challenges with a clear focus for securing your financial future.