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Do Liens From State Income Tax Ever Expire?

when do tax liens expire

Owing delinquent state tax is a serious matter.

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If you fail to pay state income tax you owe, the state can file a tax lien against property you own currently or in the future. States handle tax liens in different ways and vary in how long a lien remains in effect. Liens are often attached for a period of five years, although in some states the period can be longer or shorter.

Owing the State Tax Money

In some states, a tax lien attaches to any property you own, including real estate, vehicles and personal property. By filing a lien, the state has made a claim against your home and other real estate you own, and it can garnish your wages or seize your bank accounts, notes TurboTax. The lien filer must file the lien with the county recorder’s office in the county where the property is located. You must pay

the total amount of the delinquent tax plus penalties, accrued interest, collection fees and filing fees you owe before the state will release the lien.

Effect on Credit

If the state files a tax lien against your property, you won’t be able to sell your home until you satisfy the lien so that you can convey a clear title. Additionally, because a tax lien is listed on your credit report, it can lower your credit score, which could prevent you from refinancing your mortgage or qualifying for other loans and credit. Even after you’ve paid off the lien, it may continue to show on your credit report for up to seven years. Although states do not report liens to the credit bureaus, a state tax lien becomes a matter of public record to which credit bureaus have access. To remove a state tax lien from your credit report, you must contact the credit bureau directly.

Continuation of Tax Liens

Category: Forex

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