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Will an IRS Wage Garnishment Hurt Your Credit?

Will an IRS Wage Garnishment Hurt Your Credit?

undefinedOne of the many different ways that the IRS will try to collect unpaid back taxes is to garnish someone’s wages through a levy. When a wage garnishment is properly issued, your employer is instructed to take out a portion of your income and pay it directly to the IRS. This decrease in your take-home pay can have many effects on your life, including a possible decrease in your credit score in the following ways.

Reporting Garnishments

When you are late paying a credit account, the creditor can report the delinquency to the three major credit bureaus to go on your record. However, creditors cannot directly report a wage garnishment. Instead, the garnishment is reported as a public record, since a creditor must obtain permission to garnish your wages from the court and that case will be public record.

Unlike garnishments by private creditors, the IRS does not have to obtain a judgment or permission for the garnishment from the courts. Therefore, there is no public record to report the garnishment directly to the credit agencies. For this reason, your credit score will not decrease simply because an IRS wage garnishment exists.

Collateral Consequences

Losing a portion of your income each paycheck to the IRS can tighten a budget significantly. In many cases, an IRS garnishment will make it difficult to pay your bills, including your mortgage, car payment, credit cards, or utilities. Missing payments or being late on any of these bills will certainly cause a reduction of your credit score and can even result in additional legal action against you and those public records being reported on your credit. In this way, an IRS garnishment often does result in a significant drop in your credit score.

Call an IRS Tax Relief Attorney for Assistance Today

When the IRS uses ruthless methods such as wage garnishment to collect unpaid tax, the legal team at Attorneys Tax Relief can help you. We can help you plan ahead to protect your refund and can also help you find relief from IRS collection methods. While the office is located in the Chicagoland area, we assist taxpayers across the nation find favorable resolutions to their tax collections or other IRS issues. Please call our office at (800) 261-6671 to learn more about our services today from our IRS debt relief lawyers.