IRS reducing use of tax liens

Tax liens can present damaging problems to a consumer credit reports. However, the Internal Revenue Service appears ready to ease the rate at which it issues liens, while raising the floor at which they are distributed. USA Today reports that the IRS will soon raise the lien floor to $10,000 - double the threshold that has been on the books since the 1980s. Because of the change, thousands of taxpayers will likely be spared from receiving a lien, which were historically issued when a consumer had more than $5,000 in back taxes. IRS taxpayer advocate Nina Olson told USA Today that liens have been "overused" and that by raising the lien floor, many taxpayers will be able to feel less of a burden. Consumers with less than $10,000 in back taxes must be proactive. According to the news source, consumers should contact the IRS to have the lien stricken from their credit report, or else it will remain for seven years. Additionally, taxpayers with less than $25,000 in back taxes can elect to enter a direct debt installment agreement. Liens can cause significant damage to a credit report. Having a lien on your record could lead to a 100-point reduction in your credit score.