State and Federal Tax Liens

[masscredit]

I know tax liens are bad and they weigh heavy on your CR. I've done some research but would like to hear from people that have been down this road. I have 5 liens that probably total close to $25k. I make it week to week and month to month with my current income. There is nothing left to pay on the liens. They looked over my financial have them marked as uncollectible right now.

My current credit is in my signature plus I have an auto loan. I've been denied for some credit because of the liens. My score would probably be closer to 700 without them.

Given my situation, do I have a change of making it to the point where I'm considered having good credit again (720+)? And what other problems can I encounter because of the liens?

btw - the liens came from two businesses that failed when the economy went down hill in '07. I have a BK that was discharged in '10 and I am located in MA if that matters.

Thanks!

[electra]

When were they filed? They have less impact on your score as they age but will cause you problems in a manual review...also, won't be able to purchase a house until they are released or paid. Have you looked up MA state law as it pertains to liens and whether there is a way to get them withdrawn or at least released?

Are you aware of the Fresh Start Program that the IRS has?  You might want to explore whether you could do an offer in compromise or a payment plan and get a withdrawal of the Federal Liens.

http://www.irs.gov/uac/More-Flexible-Offer-in-Compromise-Terms-Help-Taxpayers-Make-a-Fresh-Start

[masscredit]

They are between 1 and 4 years old. I didn't look into if they can be released or withdrawn. I figure I owe them the money so they won't release their bite until they get paid (maybe I'm wrong). I can't afford to do a payment plan. I'd explore the offer in compromise if I had extra money to do it. I've wondered what kind of percentage they usually accept. Is 10-20% a stretch?

I know that it's not good to have one lien reporting. Is there a point when more doesn't do any more damage?

[electra]

I would approach it strategically.  The more recent liens are the ones doing the most damage, work on those first.  What is the 1 year old one?  That's going to be HUGE damage to your score.  Is it IRS?  If so, explore the offer in compromise (assuming you have a lump sum you could pay).  Or, can you go on a payment plan with them?  Even for a very small amount?  Think of creative ways to generate extra income or cut back. Can you sell stuff on eBay? Take another job on the side?

Do you have a 401k plan?  If so, can you borrow against it?  I know it seems overwhelming...believe me...I've been there but I can tell you that I went from the IRS claiming that I owed them $300,000 last October to having ALL my liens paid/released, soon to be withdrawn and they owe ME $8k.   I felt like my life was over last Fall but I found a great CPA who helped me and then I negotiated, borrowed money against my 401k to pay them a reduced amount and now I feel like a new person.  

[masscredit]

Looking at the CR that I printed from here (EQ) in February of this year,  they list 3 but I've seen 5 listed. None of them show if they are state or federal.  Each has the same court # and a case number.

Feb '09 - $7292.

Mar '10 - $1712.

Feb '11 - $13,447.

I'll see if I can find info about the others. Honestly, they all blend together after awhile. 

There is no extra $ to pay these right now.  If I did have extra $, the IRS wouldn't be the first on the list. After having two businesses close, two properties forclosed on (home and business), car repoed, nasty divorce, dealt with a lying attorney that got a lot more child support than I should have been paying, bankruptcy, a major health issue and now living with relativies, I have other priorties. But I am trying to rebuild my credit and my life. The liens are something that will hang over me for awhile and hold me back. 

I look at my summery above and think "damn, I went through some serious crap" then I look at you oweing $300k in back taxes. I did good with turning things around. 

[electra]

What County are they filed in? Go to the County Recorder's website and you can probably order copies of the liens online. Once you get them, go over them with a fine tooth comb. 

What years are they for?  Do you have the same year in multiple liens?

Are they IRS or State?

Compare them with what is reported on your credit report. If anything doesn't match...dispute it.

If your newest one is IRS, focus on that one and try to figure out a way to use Fresh Start to get it withdrawn...either Offer in Compromise or Automatic payment plan.

Hang in there!

[masscredit]

They are filed in Bristol County, MA Most of what I'm finding is for land. Like - https://www.fallriverdeeds.com/

I presume that most of the issues would have to do with land if I owed it. They would try to attach that. I have a loan for my car and it doesn't have any additional value. 

[masscredit]

Ok, I stopped into the local Registry of Deeds today and got copies of the tax liens that are listed for me.   There is 4 of them. 

Federal 1040 - 2007

Federal 940/941 - 2008

Federal 1040 - 2010

State income - 2004/2007

The total for these only comes up to be about $22,800.  I guess maybe there aren't liens filed for other taxes that I own. The last letter that I received from the IRS that stated they are temperory closing the collection case for the tax periods that I own gave me a total of $22,300.  I figure a total for everything at just over $39k. Maybe some old business stuff doesn't get filed against me personally.  I don't know.

Something that I'm trying to find out is... what is a tax lien?  I know what it is but how does it affect me? If I owned a house then went to sell it, the title wouldn't be clear. The IRS and DOR would have an interest in that.   I don't own a house or any land.  Also, liens don't look good on my credit report and they do negative things to my scores. I understand that. Other than that, what else is there?

[sjt]

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@masscredit wrote:

Ok, I stopped into the local Registry of Deeds today and got copies of the tax liens that are listed for me.   There is 4 of them. 

Federal 1040 - 2007

Federal 940/941 - 2008

Federal 1040 - 2010

State income - 2004/2007

The total for these only comes up to be about $22,800.  I guess maybe there aren't liens filed for other taxes that I own. The last letter that I received from the IRS that stated they are temperory closing the collection case for the tax periods that I own gave me a total of $22,300.  I figure a total for everything at just over $39k. Maybe some old business stuff doesn't get filed against me personally.  I don't know.

Something that I'm trying to find out is... what is a tax lien?  I know what it is but how does it affect me? If I owned a house then went to sell it, the title wouldn't be clear. The IRS and DOR would have an interest in that.   I don't own a house or any land.  Also, liens don't look good on my credit report and they do negative things to my scores. I understand that. Other than that, what else is there?

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I would definielty consult with a tax professional regarding an OIC. I think you are a good candidate to for that program. I think the state of MA has a similiar program. Im not sure if OIC covers business/payroll taxes 940/941 but a tax professional would be able to help you with this.

[diva_1515]

Rules laws vary state to state for liens. I had 2 tax liens owed to my state and it took me 3years to pay them off, just sending in what I could. My state does not allow you to negotiate a lower amount because of financial hardship.

I owed the IRS $8000 and I applief for an Offer in Compromise and was allowed to settle and pay my debt for $875. I had to pay $175 for 5 months and if i defaulted I would have had to pay the full amount.

You should contact the IRS to see if you can negotaite a smaller amount.

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When a tax lien is filed the state or feds can take your tax return or take money from your bank account or seize other assets....it's best to try to work out a payment arrangement to avoid any drama.