John, Thanks for your informative website. My question relates to your post about how IRS will remove a tax lien from your credit report if you pay off your debt to them in full. My question: I have a “State Tax Lien” that is filed on my credit report. Does this still fall within the IRS new law. ie. if I pay off my state tax lien will the State of California remove the lien from all 3 credit agencies.

Answer – Unfortunately the IRS’ new tax lien policy applies only to Federal Tax Liens and not to state tax liens. Having said that, if you have paid the CA lien in full it doesn’t cost you a dime to ask them for a withdrawal. If you are successful then you will be able to have the lien removed from your credit reports because the credit reporting agencies don’t maintain withdrawn liens, state or Federal.

Also, I need to point something out from your question. The State of CA didn’t put the lien on your credit reports. The liens are public records and the credit bureaus proactively pull them from courthouse records and then place them on credit files. So, if you are successful getting the state to withdraw the lien they won’t be the one to have them removed from your credit reports. You’ll simply need to file a dispute with all three of the credit bureaus, include a copy of the withdrawal paperwork, and then they’ll remove them.