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Yesterday we talked about tax liens, how they work and what they do to your credit scores. Today we are going to talk about how long tax liens remain on your credit report and how to get them removed. If youre coming in late and want to start at the beginning, I am including a link to yesterdays post at the bottom of this one. Youll also find a link in the right-hand column.

Ok, moving on.

How Long Do Tax Liens Stay On Your Credit Report?

If youre even the slightest bit credit-savvy, you already know that the vast majority of negative information, such as collections, foreclosures, Chapter 13 bankruptcies, etc., must be removed from your credit report after seven years. There is no extension period. The reporting period is the reporting period. Once it expires, federal law requires the credit bureau to remove the obsolete item.

Sometimes tax liens adhere to this rule and sometimes they dont. It depends on their status. Lets look at what the Fair Credit Reporting Act has to say about tax liens:

Information excluded from consumer reports.  Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information: ....

...Paid tax liens which, from date of payment, antedate the report by more than seven
years.

Sounds promising, right? Seven years of credit damage and then youre done. But not so fast...Read that one more time. It says paid tax liens. A paid tax lien will be on your credit report for seven years from the date you paid it off. That means, if youre making payments, the clock doesnt start on the credit reporting period until you make that last payment.

But tax liens arent like collection accounts. You cant just ignore a tax lien and expect it to fall off your credit report in seven years.

How Long Do Unpaid Tax Liens Stay On Your Credit Report?

Government debts have this nasty habit of not adhering to the standard seven-year reporting period for debt, and unpaid federal tax liens are no exception. How long do they stay on your credit report? Are you ready for this?

There is no set reporting period for unpaid tax liens on your credit report. 

Tax liens are starting to smell a whole lot like defaulted federal student loans, arent they? So, theoretically  if you leave your tax lien unpaid, it can stick around on your credit report forever. Of course, that doesnt happen. The credit bureaus will begrudgingly remove those old, unpaid tax liens after about 15 years. Because the time frame is so long, youll have to keep a close eye on your tax liens. Theyre likely to get overlooked when removal time rolls around. Yes, I know its done via computer, but that computer system seems to make heinous mistakes on a regular basis, so betting the farm that the credit bureaus will remove your tax lien after a pre-set period of time isnt wise.

An unpaid tax lien is a prison sentence for your credit.

I dont know how successful a dispute would be. Ive never worked with anyone who attempted to dispute an old tax lien as obsolete after 15 years, so I cant tell you whether the credit bureaus would be quick to remove the item or whether theyd shoot back with "unpaid tax liens can remain on your credit report indefinitely. There is no reporting period." and then let those liens hang around for an extra six months or so before quietly deleting them from your credit history.

The Ten-Year Statute of Limitations for Tax Debt

Please dont get the 10-year statute of limitations for tax debt confused with the credit reporting period for tax liens. I see this a lot. The 10-year statute of limitations for tax debt refers to the amount of time the IRS has to enforce its lien (i.e. seize your assets). It has no bearing whatsoever on credit reporting periods and how long a paid or unpaid tax lien will remain on your credit report.

Related Posts:

What Does a Tax Lien Do To Your Credit Score?

Can a Collection Agency Take My Tax Refund?