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The impact a tax lien has on creditworthiness

| Sep 11, 2018 | tax liens

Maryland residents who owe money to the Internal Revenue Service could have a tax lien placed on their property. This is true whether a person owes personal or business taxes. When a lien is placed on an item, the government is saying that it has a legal interest in the property. While this can make it difficult to get funding for a business, it doesn’t necessarily make the process impossible.

As a general rule, those who are looking for business funding prior to paying off a tax lien will want to look at alternative lenders. These lenders may be fine with a borrower having a tax lien under a certain amount or less than a predetermined percentage of a company’s annual revenue. It is important to note that a tax lien will not impact a person’s credit score. This is important because lenders will generally look at both the creditworthiness of a company and the person taking out the loan.

However, lenders will still be able to see that there is a lien in place. The easiest way to take care of the lien is to pay it off, and this can be done at once or through a payment plan negotiated with the government. Liens are removed from a credit report 30 days after they are paid off.

A federal tax lien may make it difficult to obtain financing for either business or personal reasons. Those who receive a lien notice should make sure that it is based on correct information. This can be done by hiring an attorney who may review the case and provide insight into the matter. An attorney could work with the Internal Revenue Service to resolve the matter in a manner favorable for the taxpayer.