New FCRA Lawsuit Against Equifax

The Kittell Law Firm filed a new Fair Credit Reporting Act lawsuit today against Equifax for mixing the credit file of our client with that of his father.  As a result, three of the father's tax liens were reported by Equifax on our client's credit report.  What's even worse than that?  Equifax failed to remove the father's tax liens from the son's credit report, even after the son provided documentation that the tax liens belonged to the father.  Equifax continued reporting the father's tax liens on the son's credit report, causing the son to be denied credit on at least three occasions. 

Its bad enough to mix up two people with different names, different Social Security numbers, different addresses and different dates of birth.  What's worse is that Equifax still could not get it right even after being told to fix the obvious error.  Good thing the Fair Credit Reporting Act exists to provide consumers with the opportunity to obtain justice for the aggravation and other damages caused by the credit bureaus' callous disrespect for the accuracy of the credit reports they generate.

Time Limit for Reporting Tax Liens

Tax liens are treated differently than any other item on a credit report.  Most adverse items are allowed to be reported for seven years from the date of delinquency, regardless of whether the item is ever paid.  Tax liens, on the other hand, potentially fall under two different seven year reporting periods.

15 U.S.C. 1681c(a)(3) says that paid tax liens are allowed to be reported for seven years from the date they are paid.  All other tax liens fall under the catch all provision found at 15 U.S.C 1681c(a)(5) and are allowed to be reported for seven years from the date they come into existence (since they are immediately considered adverse). 

Thus, you could have an unpaid tax lien reported for seven years, fall off the report, then, when paid, reappear for another seven years.  It is therefore not in a consumer's best interest (at least as far as credit reporting) to pay a tax lien after seven years.  But, it would be in the consumer's best interest to pay the tax lien as early in the seven year unpaid tax lien reporting period as possible, since this will allow both seven year periods to run more or less concurrently.  Kind of like a two for one sale.

But what about tax liens that are satisfied and/or released without any payment.  For instance, I had a client call me about an eight year old tax lien appearing on his credit report that had been "released" due to his bankruptcy about four years ago.  In this instance, the lien should have fallen off the report as obsolete since it was over seven years old and had never been paid.  A release does not always mean payment.  This is one such instance.  Another is where the lien is entered in error and released not because of payment but because of a recognition of the erroneous nature of the lien.

Unfortunately, the credit bureaus do not appear to have a mechanism in place to recognize the interplay between 1681c(a)(3) and 1681c(a)(5) when applied to tax liens.  As a result, tax liens often appear on consumers' credit reports longer than they should and often require a dispute to the credit bureaus (or more) to get them removed.