{"id":19072,"date":"2022-10-03T13:23:28","date_gmt":"2022-10-03T19:23:28","guid":{"rendered":"https:\/\/www.lexingtonlaw.com\/blog\/?p=19072"},"modified":"2024-05-03T13:17:14","modified_gmt":"2024-05-03T19:17:14","slug":"does-irs-debt-show-on-your-credit-report","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/negative-items\/does-irs-debt-show-on-your-credit-report.html","title":{"rendered":"Does IRS debt show on your credit report?"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. <\/em>See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

\n

The IRS will not report the taxes you owe to the credit bureaus. They work with private collection agencies, but this does not show up on your credit report. However, it can harm your finances in other ways.<\/h2>\n<\/div>\n\n\n\n

Americans owed over $114 billion in back taxes, penalties and interest in 2020, according to the IRS<\/a>. This means that a lot of people are at risk of having their tax debt go into collections. As America recovers from the pandemic, many people are still struggling to pay their taxes, so if you have a large tax debt, you\u2019re not alone. Unfortunately, if you don\u2019t pay your taxes, your debt is at risk of going to collections.<\/p>\n\n\n\n

The main concern you may have is that IRS collections may damage your credit score, but this isn\u2019t necessarily the case. Here, you\u2019ll learn how the private IRS collection agency actually works and what happens to your credit if you don\u2019t pay your taxes. With this understanding, you can better manage your financial life and work to maintain a healthy credit score.<\/p>\n\n\n\n

Do IRS collections go on a credit report?<\/h2>\n\n\n\n

If you haven\u2019t been up to date on paying your taxes, you don\u2019t have to worry about it showing up on your credit report. Not only does the IRS not report collections to the three major credit bureaus<\/a>, but they also don\u2019t report missed or late payments either. This is good news because late and missed payments can hurt your credit score when they\u2019re reported.<\/p>\n\n\n\n

The Taxpayer Bill of Rights<\/a> states that all American taxpayers have the right to privacy and confidentiality, which is why your outstanding debt isn\u2019t reported. This is beneficial because your credit report is run when you apply for loans, housing and other services. Regardless of what you owe, those who check your credit won\u2019t see your outstanding tax debt.<\/p>\n\n\n\n

Do IRS tax liens show up on your credit report?<\/h3>\n\n\n\n

Tax liens used to show up on your credit reports, but this changed as of April 2018<\/a>. A tax lien is when the IRS files a legal claim against you for the taxes that you owe. If the IRS files a tax lien, you are obligated to pay your tax debt, or they have the right to seize your assets and sell them as a way to pay off your debt.<\/p>\n\n\n\n

The halting of reporting tax liens was part of the National Consumer Assistance Plan (NCAP)<\/a>, which removed public records from credit reports. Although the IRS can still pursue a seizure of your assets, this does not show up on your credit report, unlike Chapter 7 bankruptcy<\/a>, which also seizes property and does show up on your credit report.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

What happens if the IRS sends you to collections?<\/h2>\n\n\n\n

Much like other forms of debt, your IRS debt can go to a collection agency due to nonpayment. Congress passed a law<\/a> that became effective as of September 2021 that requires the IRS to work with private collection agencies. These debt collectors<\/a> will attempt to contact you, and if you still can\u2019t pay off your debt, you can work with them to arrange a payment plan that works for you.<\/p>\n\n\n\n

There are a few reasons the IRS may send your debt to a private collection agency:<\/p>\n\n\n\n