A tax lien is a law that is imposed by the federal government of the Unites states of America when one owesur unpaid taxes to the Internal Revenue Service (IRS). The government and the treasury hold one liable for a tax lien when one has delayed to make tax payments on time.
Federal tax liens show the entire world that one owes the IRS money via unpaid taxes and any individual who pulls out one’s report on credits or whoever tries to access information on public records will clearly know of the Lien. Tax liens always have a negative effect on one’s credit score since they show up on public records. A tax lien has the potential of putting off potential lenders and creditors and it damages one’s ability to be lent or credited money and more so it makes it more difficult for one to purchase a car or a home.
A public record on a tax lien becomes part of credit reports and it remains so for up to seven years even if full payments have been made. In order to remove the tax lien in the public record, one can file a dispute with the aid of the credit bureaus. The way one can file a dispute for other errors that have been incurred by other credit reports is the same way one can file a complaint. Another way of getting a tax lien released from one’s credit report is by requesting the Credit Bureau to remove it if the IRS has withdrawn it from its records.
When the statute of limitation expires, this becomes is a clear indication that the tax lien should not be imposed, and if the lien is not removed on the credit report one should make a call to the Internal Revenue Service. The call is to inform the bureau of the reason as to why one needs the lien dispatched as soon as possible (Loftis 48). In case one is buying a house or a car and the tax lien is a hindrance to the purchasing process the Taxpayer Advocate service should be contacted for immediate action to be taken towards the removal of the lien.
Buying a car and a house simultaneously is a little bit complicated. Alternatively, it is recommendable to have both the car and the house if there is adequate liquid capital to purchase them. However, since one wants both the vehicle and the home it is much more advisable to acquire the home first because its cost and other commitments are much lower. Qualifying for a car loan is also very easy unlike qualifying for a house loan. For instance, the analysis of a customer’s credit report is less when he/she is acquiring a vehicle and it is sensible for one to pursue the house purchase first and then follow up with the car.
In case the purchase of the car cannot be postponed, one should first analyze and see whether a lender can qualify him/her for a loan then determine whether personally he/she can gather the collateral to cover the purchase price of the desired car. Some lenders require one to pay off some or all the debts they have in order for them to qualify for a home loan therefore lending both for the car and the house will be difficult.
Works Cited
Loftis, Larry. Profit by Investing in Real Estate Tax Liens: Earn Safe, Secured, and Fixed Returns Every Time, New York, NY: Kaplan Pub, 2007. Print.