Frost Law
Effective on July 1st, 2017, the three major credit reporting agencies, TransUnion, Equifax, and Experian, introduced new standards that will require tax liens and civil debts to include more personal information; otherwise, the tax liens and civil debts will be excluded from a person’s credit report. The changes will require tax liens and civil judgments to include a person’s name, address, and Social Security number or date of birth on the public record before being reported. Virtually all civil judgments will not meet these new standards and will likely be removed from the credit reporting process completely. Approximately 50% of all tax liens will not meet this standard and will be removed from consideration. Bankruptcy consideration should be unaffected. The credit reporting agencies are also required to visit the courthouse at least every 90 days to update the public records in the database.
The IRS is unable to include more information in tax lien filings because 26 U.S. Code § 6103(b) defines a taxpayer’s identity as part of confidential information included in tax return information. Return information is confidential in connection with any tax, penalty, interest, fine, forfeiture, or other imposition, or offense. 26 U.S. Code § 7213 defines a willful disclosure of return information as a felony for Federal employees, State employees, and other persons.
The stricter reporting requirements are part of an effort by the major credit reporting agencies to reduce the amount of incorrect information contained in credit reports. The reforms are part of The National Consumer Assistance Plan which includes other reforms such as waiting 180 days to report medical debt and enhanced dispute resolution procedures. By September 15th, 2017, the credit reporting agencies will require that all data furnishers (creditors and lenders that report information to the credit agencies) switch to a new format that requires additional personal information in all reports.
The changes will specifically benefit people who currently have tax liens and/or civil judgments by likely removing the liens and judgments from their credit reports and improving their credit scores. The approximate credit score increase for people who have liens or judgments removed is 20 points. This could give a boost for many people and the enhanced public record standards should also benefit everyone through ensuring credit reports are more current and accurate. The specific timeline for updating databases prevents outdated public record information from remaining on credit reports for extended periods of time, and the new personal information requirement will help prevent cases of mistaken identity.
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