IRS Tax Debt

IRS Tax Debt Must Be Paid
If you owe the government taxes, it's important that you find a way to pay the bill. Paying even part of your tax debt to the Internal Revenue Service (IRS) is better than not paying at all. Not paying your taxes can ruin your credit.

The King of Creditors
IRS tax debt will usually take priority over other debts you may owe. That's why it's important to file your return on time and pay whatever you can. Even if you file for an extension you should still try to pay some money toward your taxes. The IRS will bill you for the remainder of your taxes after processing your return, and penalties and interest will be added.

Tax Liens and Garnishment
If you don't pay your IRS tax debt the federal government may garnish your wages or go after money in your bank accounts. If you have your wages attached, you could end up without enough pay for your living expenses. The IRS may also place a tax lien against property such as a home or car. A public notice will be filed, which means that lien will take priority over other debts owed. Once a lien has been filed against your property, your credit rating will suffer and you may not qualify for loans, credit cards, or rental leases.

It's difficult to get a federal lien released unless you completely pay off your tax debt. Try to work with the IRS to pay off taxes to avoid ruining your credit.