Federal and State Tax Liens Effect on Credit Rating

You noticed an IRS or state tax debt on your credit report.  Your first thought, “How can you pay when the IRS does everything possible to make your life difficult?”  There is one issue with this thought.  Federal or state tax agencies do not report your back tax debt to the credit bureaus.

Federal and state tax agencies do not report back tax balances to the credit bureaus.  The credit bureaus find out about back tax debts through third parties.

Tax lien information is available to the public.  You can read about recently filed federal and state tax lien filings in your local newspaper. There are companies that gather information on all recently filed IRS and state tax liens.  The credit bureaus then get this information from the third party companies.  The IRS or State of Michigan don’t report the taxes directly to the credit bureaus.

To remove back taxes from the credit bureaus, you must contact each individual credit bureaus.  Learn about the 3 Step Process for removing tax liens.

IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.