What the IRS Can Do to Help You with Back Taxes
Owing back taxes can feel overwhelming, but you’re not alone — and the IRS actually offers several options to help taxpayers get back on track. Ignoring your tax debt can lead to penalties, interest, wage garnishments, or even liens, but working with the IRS proactively can ease the burden and help you avoid the worst outcomes.
Here’s how the IRS can help if you have unpaid taxes:
📝 1) Installment Agreements (Payment Plans)
The most common option is an Installment Agreement, which lets you pay your tax debt in monthly installments over time. Depending on how much you owe, you can often set these plans up online if you owe $50,000 or less, or by working with an IRS agent if your balance is higher.
Benefits:
✅ Affordable monthly payments based on your income and expenses.
✅ Avoids more aggressive IRS collection actions.
✅ Keeps you in good standing as long as you make payments.
🤝 2) Offer in Compromise (OIC)
If you can’t afford to pay your full tax debt, you may qualify for an Offer in Compromise, which allows you to settle your debt for less than the amount you owe. To be approved, you must show that paying the full amount would cause financial hardship.
Benefits:
✅ Reduce your tax debt significantly if you qualify.
✅ Get a fresh start if you can’t afford to pay everything.
✅ Stop collection efforts once an offer is accepted.
⏸️ 3) Currently Not Collectible Status (CNC)
If you truly can’t pay your taxes and your financial situation shows you can’t cover basic living expenses, the IRS may mark your account as Currently Not Collectible. This status stops IRS collections temporarily — but interest and penalties may continue to accrue.
Benefits:
✅ Pause collection activity if you’re experiencing serious financial hardship.
✅ Protects your income and assets from levies during the CNC period.
⚖️ 4) Penalty Abatement
If you’ve always paid on time in the past or have a reasonable cause (serious illness, natural disaster, etc.), you may be eligible for penalty abatement. This can remove or reduce failure-to-file or failure-to-pay penalties, making it easier to pay your balance.
Benefits:
✅ Save money by reducing the total amount you owe.
✅ Available to many first-time or struggling taxpayers.
🛡️ 5) IRS Taxpayer Advocate Service (TAS)
If you’re facing unique hardships, delays, or believe the IRS isn’t resolving your case fairly, you can contact the Taxpayer Advocate Service, an independent office within the IRS. They can help cut through red tape, speed up cases, and protect your rights.
🕰️ Act Quickly to Avoid Bigger Problems
The worst thing you can do if you owe back taxes is ignore the problem. Interest and penalties compound over time, and the IRS has the power to garnish wages, levy bank accounts, or place liens on property. Contacting the IRS as soon as you know you can’t pay in full is key to minimizing the damage.
✅ Final Thoughts
The IRS wants to collect what it’s owed, but it also understands that many taxpayers fall behind due to financial hardship or unexpected life events. By using IRS programs like payment plans, Offers in Compromise, or CNC status, you can regain control of your finances and work toward a solution.
If you’re feeling overwhelmed, consider consulting a tax professional who can help you understand your options and communicate with the IRS on your behalf.