Tax Liens Don't Play by the Same Rules: Reader Question

The system for credit report record expiration can seem pretty simple. Most things come off after 7 years, bankruptcy after 10. Piece of cake, right? Not quite. The Fair Credit Reporting Act has a lot of different rules when it comes to negative records. Here's an email we received this week:

I had a federal tax lien for $66,000 put on court records Nov.of 1997. It was for self employment tax years 1986-1996.  I spoke with a tax attorney two years ago and he said most had expired then and all would be expired by Feb 2008.  It is now June 2008 and two of the three services are still reporting it.  How do I correct this?   At the court house, at the credit bureaus, how?

Tax liens are the nastiest, most persistent kind of record you can have on your credit report. They laugh at the standard 7-year expiration date. Here are the rules for tax liens:

Unpaid Tax Liens - There is no set expiration date for unpaid tax liens in the FCRA. That means, they don't ever have to expire if left unpaid. Some credit bureaus cap these records at 15 years, but they don't have any legal obligation to do so.

Paid Tax Liens - Once a tax lien is paid off, the record will stay on your credit report for another 7 years from the payment date. Tax liens are the only records that have an expiration date tied to repayment.

What gives? Tax liens are government debt and the government helped set the rules when it comes to expiration dates. Similar to federal student loans, tax liens don't play by the same rules as standard debts.

In this reader's case, that unpaid federal tax lien has a chance of expiring in 2012. It depends on the credit bureau policy. He can try disputing the record with the remaining two credit bureaus, but there's no guarantee it will come off.

Emily Davidson – A former TransUnion insider and a member of Credit.com's expert team. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.