Money Fix: Reconciling debt to the IRS
According to John Ulzheimer, "The IRS was in a good mood" Thursday.
Ulzheimer wrote that in an entry Friday on SmartCredit.com, where he is president of consumer education.
That was the day after the Internal Revenue Service announced modifications to its tax lien and collection methods, this with an eye to easing up on taxpayers and still getting its money. Now taxpayers who pay their back taxes can request a withdrawal of the liens. That means the blotch on their credit reports - at least at Experian and Equifax, two of the three major credit reporting agencies - will be wiped out, instead of sitting there for seven years, said Ulzheimer. (TransUnion did not respond to Newsday's queries about their plans.)
Things to know:
Bounce back: "Liens will now be withdrawn once full payment of taxes is made when the taxpayer requests it," said Doug Shulman, IRS commissioner. "This lien change will mean that taxpayers who feel that a withdrawal is necessary for them to make a fresh start, can get that fresh start."
Be advised: This new approach "would provide an opportunity for people who are obviously in financial distress to have a huge piece of negative information removed from their credit report," said Carolyn McCormack, assistant vice president of SafeGuard Credit Counseling Services Inc. in Hauppauge. But, Ulzheimer points out that "the process to have the lien removed isn't 'autopilot.' " You must request it. He also suggests that taxpayers with withdrawn liens alert the credit reporting agencies.
Still have questions? Learn more at IRS.gov or at an open house March 26 (9 a.m. to 2 p.m.) at the IRS' Garden City office.
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