If you’ve received a letter from the IRS and your heart sank, you’re not alone. Every year, thousands of Americans face tax problems—whether it’s unpaid taxes, penalties, or the threat of wage garnishments. In FY 2024, Taxpayer Advocate Service (TAS) received 256,737 new requests for assistance.
The good news? There are solutions. And with the right approach, you can get back on track.
Let’s break down what you need to know in plain English.
Common Tax Relief Options
Depending on your financial situation, the IRS offers several programs to help taxpayers manage or reduce their debt:
- Offer in Compromise (OIC): This is essentially a settlement. If you truly can’t pay your full tax bill, the IRS may allow you to settle for less. It’s not for everyone—you’ll need to prove serious financial hardship—but it can be a life-changing option for those who qualify.
- Installment Agreements: Can’t pay the full amount now? You may be able to set up a monthly payment plan.
- Short-term plans (under 180 days) don’t charge setup fees.
- Long-term plans (over 180 days) do, but they spread payments over months or even years.
As long as you stay current, the IRS usually pauses collection activity.
- Currently Not Collectible (CNC) Status: If you can’t afford to pay anything right now, you may qualify for CNC status. This temporarily halts IRS collection efforts like garnishments or levies. You still owe the tax—but it gives you breathing room.
- Penalty Abatement: The IRS can remove or reduce penalties for reasonable causes—like a serious illness, a natural disaster, or relying on incorrect advice. If this is your first time in trouble, you might also qualify for a first-time penalty abatement.
The Process and What to Expect
A frequently asked question is, how long does it take? That depends on the option and your situation. Simple payment plans can be approved quickly. An Offer in Compromise may take 6–12 months or more.
What do you need to apply?
Be ready to share:
- Proof of income and expenses
- Copies of tax returns
- Records of assets and debts
- Any IRS letters or notices
Can you stop IRS collections while sorting this out?
Yes. Once you start working with a tax professional—or apply for certain relief programs—the IRS may pause collection actions. Time is key here, so don’t delay.
Will tax relief affect your credit score or refunds?
The IRS doesn’t report to credit bureaus. But if you owe money, they may hold back your future tax refunds until your debt is resolved.
Should You Work with a Tax Resolution Specialist?
If your situation is simple—say, a straightforward payment plan—you might be able to handle it on your own. But for anything involving hardship claims, large tax debts, or aggressive IRS action, a professional can make a big difference.
Here’s what to look for:
- A licensed Enrolled Agent (EA), CPA, or tax attorney,
- Experience dealing with the IRS,
- Clear pricing and no surprise fees, and
- A track record of success and client references.
To help you prepare for tax resolution specialist interviews, CBS News published 5 tax relief questions to ask a specialist now. Keep in mind, most tax resolution professionals should handle all IRS communication for you.
Don’t Ignore the Problem
The worst thing you can do is nothing. IRS issues don’t disappear—they get worse over time. But there are programs and people who can help. Whether you’re behind a little or a lot, the first step is reaching out.
Need Help Now?
If you’re facing a tax problem and don’t know where to turn, reach out to our tax resolution specialists. A quick consultation could save you time, money, and stress down the road.