A lien if defined as a hold of sorts, granting the holder the right of first refusal to a specific property if proper restitution of debt is not made. A tax lien can be further specified to indicate a hold has been place on the house or land to secure property taxes. There are a variety of reasons for this to be levied, including failure to pay income taxes, personal property taxes, or assessment on the property itself. So for persons who have either failed to pay the tax or ignored the request to make restitution, the government will place this kind of hold on the property as added incentive to repay the full amount owed.
IRS agents are the initiators of this process, and will indicate when the lien becomes effective since they are the law when it comes to this type of development. Any tax lien that is not paid off within the ten days grace period from the date of notice is automatically made retroactive to the original assessment date. There may be more than one claim on a particular piece of property, and this can be prioritized by the type of lien that is being assessed, and the type of creditor who filed it.
Anytime a tax lien is brought against the property of a homeowner, it automatically appears on his credit statement as well. Even if the tax lien is paid off, it can remain on the statement of credit for 7 years after that. This is the best case scenario, since the ones that remain unpaid will be retained for at least a 15 year block of time, with the possibility of an infinite time limit. Of the 3 credit reporting bureaus, Equifax and Transunion will keep this entry on their reports for an indefinite time span, but Experian only covers 15 years.
A tax lien significantly affects the credit rating of any individual who has been assessed this penalty, and will continue to affect it in a negative way as long as the information remains on the report. Every financial area is affected; including home mortgages, car loans, and credit card applications. The best move any consumer can make is to get rid of this as soon as possible. There is only one method, and that is to pay off the lien in full, and contact the assessing agency with documented proof of this action. Although the tax lien's effect is seen for at least 7 years, it's impact is severely reduced when paid off in full.