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Here in USA, some debts to the government (such as certain school loans) can lead to a bad credit if the person defaults on the debt.

How is it with tax debt to IRS, can that lead to a bad credit?

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I'm assuming by "bad credit" you mean low credit score or negative marks on your credit report. If so - yes, most definitely.

Not only that, the IRS can garnish your salary and put a lien on your property, and these also appear on the credit report and affect your credit score.

  • According to the annual reports of the Advocate Service irs.gov/Advocate (who criticize it) IRS liens almost all collection cases automatically. TAS also emphasises that if you pay, or make satisfactory arrangement to pay like an installment agreement, the lien is normally released automatically, which still appears on your credit file as "bad in the past" for IIRC 10 years, but you can make a specific request to have it withdrawn which removes it from the credit file entirely. – dave_thompson_085 Mar 17 '15 at 7:15

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