Tax relief frequently asked questions

Tax relief refers to IRS programs that help taxpayers resolve tax debt they can't pay in full — installment agreements, offers in compromise, currently-not-collectible status, and penalty abatement. The goal is a resolution that stops enforced collection while fitting what you can actually pay.

Not always. A simple balance under $50,000 with no enforcement can often be resolved directly with an online IRS installment agreement. Professional help adds value for large debts, levies or liens, offers in compromise, business payroll tax, innocent spouse relief, or multiple unfiled returns.

Fees vary by complexity: a simple installment agreement may be a few hundred to a couple thousand dollars, while an offer in compromise or multi-year unfiled returns can run several thousand. Legitimate firms quote a written flat fee after reviewing your case, not before.

An offer in compromise is a formal agreement to settle your tax debt for less than the full amount. The IRS accepts it when your 'reasonable collection potential' — what it could collect from your assets and future income — is less than what you owe. The IRS accepts roughly 30–40% of offers.

Currently not collectible (CNC) status pauses IRS collection when paying would leave you unable to meet basic living expenses. Levies and garnishments stop, but the debt and interest remain and the 10-year collection statute keeps running. For some taxpayers, CNC lets the statute expire.

Yes. First-time penalty abatement removes penalties for taxpayers with a clean three-year compliance history. Reasonable-cause abatement removes penalties caused by illness, disaster, death in the family, or other circumstances beyond your control. Removing penalties can cut a balance significantly.

Yes. A continuous wage levy requires your employer to withhold part of each paycheck. The IRS leaves an exempt amount based on your filing status and dependents, but it's minimal. Entering an installment agreement or other resolution releases the levy.

Yes, through a bank levy. The IRS must send a Final Notice of Intent to Levy at least 30 days before levying. The bank then holds the funds for 21 days before sending them to the IRS — that window is your chance to resolve the debt or claim exempt funds.

Yes. If your assessed balance exceeds the seriously-delinquent threshold (about $59,000, inflation-adjusted), the IRS can certify the debt to the State Department, which may revoke or deny your passport. Entering a resolution reverses the certification.

Generally 10 years from the date of assessment (the Collection Statute Expiration Date). Certain actions — filing an offer in compromise, requesting a Collection Due Process hearing, filing bankruptcy — pause the clock and extend the time.

The failure-to-file penalty is 5% per month up to 25% of the tax — ten times the failure-to-pay penalty. The IRS can also file a substitute return for you that ignores your deductions, usually overstating what you owe. Always file, even if you can't pay.

Some older income tax debts can be discharged if they meet the 3-year, 2-year, and 240-day rules. Trust fund taxes, recent income tax, and taxes from unfiled returns are not dischargeable. A tax professional or bankruptcy attorney can determine whether yours qualifies.

Avoid firms that promise 'pennies on the dollar,' demand large upfront fees before reviewing your case, pressure you to sign immediately, or have no identifiable licensed professional. Legitimate firms are led by tax attorneys, CPAs, or enrolled agents and give a realistic assessment.

Only tax attorneys, CPAs, and enrolled agents can represent you before the IRS. Verify an attorney's bar status, a CPA's license with the state board, and an enrolled agent's status with the IRS. Make sure the licensed professional — not just a salesperson — works your case.