Tax Debt Help | What you can do when you have tax debt

September, 12 2025 by Lisa Brugman, EA

Let’s face it, very few things in life are truly certain. We’re reminded of this all the time, like when the weather forecast says, “clear skies,” and yet you still end up drenched in a sudden downpour. But as Benjamin Franklin famously wrote, “In this world nothing can be said to be certain, except death and taxes.”

While taxes are a certainty, owing money to the IRS doesn’t have to feel like the end of the world. Still, if you’ve ever opened your mailbox to find one of those official-looking IRS envelopes, your heart probably skipped a beat. It’s natural to feel nervous, especially if the notice is telling you that you owe more than you thought.

Maybe you filed your taxes and believed you had a small balance due, only to find out the IRS disagrees and says you actually owe thousands. It can be a jarring experience. But here’s the good news. You’re not alone, and there are real solutions available. The IRS offers several options to help taxpayers settle what they owe in ways that can fit their financial situation.

Let’s walk through these IRS debt relief programs and see which one might work for you or someone you know.
 

1. Short-Term Payment Plan

If you can’t pay right now, but you’re confident you can pay off the full balance within 180 days, the IRS offers a short-term payment plan. This is a great solution for taxpayers who just need a bit more time to get their finances in order.

There’s no setup fee for this option if you apply online, by phone, or in person. Interest and late-payment penalties may accrue until the debt is paid in full. So, the sooner you pay it off, the less you’ll owe overall.

Short-term payment plans can often be set up quickly and easily through the IRS website. No additional forms are needed—just log into your online account and request the plan.
 

2. Long-Term Installment Agreement

A long-term installment agreement can be the best option for taxpayers who need more than six months to pay.

These types of agreements allow you to pay what you owe in monthly installments over time, up to six years (72 months) for a Streamlined Installment Agreement, which is the most common type of agreement. 

There is a setup fee for long-term installment agreements, which can be reduced or waived for low-income taxpayers, as long as you stay current on future tax filings and payment requirements while the agreement is in place. The IRS offers direct debit options that make it easier to stay on track and avoid defaulting.

Keep in mind that interest and penalties will continue to accumulate until your balance is fully paid. But many taxpayers appreciate the structure and predictability that this plan offers.
 

3. Offer in Compromise

Sometimes, a taxpayer’s financial situation is so constrained that even a payment plan isn’t realistic. In these cases, the IRS may agree to settle the tax debt for less than the full amount owed through a program called an Offer in Compromise (OIC).
 

To qualify for an OIC, you must demonstrate that paying your full tax liability would create severe financial hardship. The IRS will evaluate your:

• Income
• Assets
• Expenses
• Overall ability to pay

The application process involves submitting Form 656 Booklet, Offer in Compromise, and Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, or 433-B (OIC), Collection Information Statement for Businesses, depending on your business status. There’s also an application fee and initial payment requirement unless you qualify for a low-income waiver. The best thing to do is to make sure you pre-qualify by using the IRS’ prequalifier tool.

If accepted, an OIC gives you a clean slate by allowing you to settle your tax debt once and for all, often for a fraction of the original amount.
 

What If You Do Nothing?

Ignoring a tax bill from the IRS is never a good idea. The longer a debt goes unpaid, the more the IRS will ramp up collection efforts. This could include:
 

• Wage garnishments
• Bank levies
• IRS Levies
• Tax liens on your property

While tax liens are no longer reported on credit reports, it is important to remember that they are still a matter of public record. This means that potential lenders, landlords, and employers may still be able to access information about tax liens through public records searches. This could affect your ability to get approved for loans, mortgages, or even certain jobs, even though the lien doesn't directly impact your credit score. 

In some cases, the IRS may even seize property or intercept future tax refunds to apply toward the balance owed. That’s why acting sooner rather than later is so important.
 

Not Sure Where to Start? We Can Help.

Trying to figure out which IRS tax relief program is best for you can feel overwhelming, especially when you’re already stressed about money. Fortunately, you don’t have to go through it alone.

Our experienced tax professionals are here to guide you through your options and help you understand the pros and cons of each one. Whether you qualify for an extension, a payment plan, or something more substantial like an Offer in Compromise, we’ll help you navigate the process with confidence.

The initial consultation is free and comes with no obligation. We’re here to answer your questions, help you make informed decisions, and support you every step of the way.

So, if you’ve received that dreaded IRS letter, don’t panic—help is just a call away. Contact our Tax Debt Relief team. Let’s work together to find a solution that gets you back on track and puts your mind at ease.