The IRS doesn't report your tax debt directly to consumer credit bureaus now or in the past. In fact, laws protect the information on your tax return from disclosure by the IRS to third parties (see the Taxpayer Bill of Rights). However, once a federal tax lien notice has been filed, your debt becomes a public record. Your credit reports no longer show tax liens, but that doesn't mean a tax lien can't cause you problems if you apply for a loan.
In particular, when you apply for a mortgage, your lender can search public records to find out if you have pending judgments or tax liens against you. Tax levies don't appear on your credit report. However, the tax may appear in public records, which can harm your credit. Federal and state tax authorities can place a lien on your credit report for unpaid taxes, the same credit report that determines your credit score.
Eliminating negative information generally means an increase in the credit score of Americans who previously had tax liens on their credit reports. If you need to make a payment to the federal government this tax season, you may have questions, such as whether or not delaying your taxes could harm your credit. Tackling your tax issues head on, whether on your own or with the help of an accredited tax professional, is your best decision. In some cases, people with impeccable payment histories had someone else's right of withholding incorrectly recorded on their credit report.
Paying extra money in penalties and interest for having sent your tax payment late could make it harder to keep up with the rest of your bills. You can receive a tax lien from the Internal Revenue Service (IRS) or from state tax authorities. In addition to putting your current assets at risk, a tax lien can affect any future asset you acquire while the tax is in effect. Now that tax levies no longer appear on credit reports, they don't have any direct influence on your credit scores.
While an unpaid tax bill may not directly affect your credit, it can lead you down a path with serious negative consequences for your financial situation, including damaging your credit scores. There are several ways to find out if a tax lien has been filed against your property if you haven't paid your taxes. The not-so-good news is that even though tax levies no longer appear on credit reports, it doesn't mean they can't mean financial problems for you. A tax levy gives the government the legal right to seize or sell its assets to pay what it owes in back taxes.
A tax levy won't appear in your credit history, but it definitely shouldn't be ignored because it can have lasting effects on your credit and financial health. In fact, as penalties and interest continue to rise, pretending that your tax bill doesn't exist will only worsen your situation. If you don't pay or arrange to settle your tax debt, the IRS can seize, seize and sell any type of real or personal property that belongs to you or in which you have an interest.