Back Taxes | Can They Affect My Credit?

Two of the hardest parts of adulthood are maintaining a strong credit score and paying back taxes. Owing the IRS is scary, especially if you can’t afford to pay back your tax obligations in full. Luckily, there is help. Today, you will learn all about past-due tax liabilities and what affect they have on your credit.


Unfortunately, back taxes sometimes appear on your credit report. The IRS does not immediately report your unpaid tax bill to the credit reporting agencies. However, if you owe over $10,000 in past-due debt and make no attempts at reaching a resolution, the IRS will file a Notice of Federal Tax Lien on you. This item on your credit report shows up as a “seriously negative” item.


If the IRS files a federal lien against you, do not panic. Take the first baby step to resolving the situation. Start repaying your debt. Your tax lien can stay on your credit report for up to seven or 10 years depending on your state. Take this step as soon as you can afford to.

Payment Plans

On paper, the simplest way to remove a tax lien from your credit report is to pay off your back taxes in full. However, you probably would not be delinquent if you could afford to pay it. Remember, communication is key. Let the IRS know of your financial situation and your willingness to pay off your debt by applying for an installment plan.


Knowing that back taxes can affect your credit and knowing what to do if the IRS files a lien against you is only half the battle. If you are delinquent on your tax bill, you are probably anxious. To protect yourself from further damage, it is crucial that you know what not to do now.

Ignore the Problem

Be proud of yourself. You have taken a huge step by opening the IRS letter informing you of your lien. If the IRS accepts your proposal for a payment plan, stick to it. If you do not, the IRS can do much worse than hitting you with interest and penalties. You could have your passport canceled, your wages could be garnished, and funds could be seized directly from your bank account.

Choose the Wrong Way to Pay

Besides negotiating the best payment arrangement for your unique situation, a professional tax expert can advise you on the best way to pay your tax bill. It is very rarely a good idea to put your tax bill on your credit card because of high-interest rates. Taking out a personal loan can come with hefty fees and poor repayment terms. Borrowing against your home equity can put your house at risk. A professional will take the time to sit down with you and examine the pros and cons of all your options.

Fail to Set up a Payment Plan

If you owe less than $50,000 to the IRS, you can set up a payment plan online. If you owe the IRS more than $50,000, a Form 9465 will need to be filed and mailed to your local IRS office to determine what kind of plan you qualify for. With help, this is a stress-free process.


Your credit score affects everything from your ability to get certain jobs to your insurance rates. If the IRS has filed a federal lien against you, contact us at Geaux Tax Resolution today for courteous, confidential, expert help. There are steps you can take to protect your credit score, and we are here for you every step of the way.

Share on:

Leave a Reply

Your email address will not be published. Required fields are marked *