Tax Debt Help & IRS Resolution Guide

A tax lien is a legal claim filed by the government against your property (including real estate and personal assets) to secure payment of a tax debt, protecting the government's interest. A tax levy is an active legal seizure of your assets—such as freezing your bank account, garnishing your wages, or seizing physical property—to satisfy that debt.

Under the Internal Revenue Code, the IRS has exactly 10 years to collect outstanding taxes, starting from the date the tax liability was formally assessed. This timeline is known as the Collection Statute Expiration Date (CSED), though it can be paused or extended by actions like filing for bankruptcy, requesting an Offer in Compromise, or requesting an appeal.

An Offer in Compromise (OIC) is an agreement that allows a taxpayer to settle their tax liability for less than the full amount owed. It is a strict financial hardship program, and only taxpayers whose income, expenses, and asset equity demonstrate they cannot realistically pay their full liability before the collection statute expires will qualify.

The IRS calculates RCP by adding the net realizable value of your assets (equity in home, vehicles, bank accounts) to your future remaining income (monthly discretionary income after subtracting allowable living expenses, multiplied by 12 or 24 months, depending on the payment option chosen).

CNC status is an IRS designation for taxpayers who cannot afford to pay their basic living expenses and their tax debt simultaneously. While in CNC status, the IRS suspends active collection actions (like levies or garnishments), but interest and late-payment penalties continue to accrue on the outstanding balance.

Yes. Because the IRS possesses administrative collection authority under federal law, they do not need to file a lawsuit or obtain a court judgment to garnish your paycheck. They must, however, send a series of written notices culminating in a Final Notice of Intent to Levy and Notice of Your Right to a Hearing before starting the garnishment.

A streamlined installment agreement allows taxpayers to set up a monthly payment plan without providing a detailed financial statement or asset disclosures. The standard threshold is a balance of $50,000 or less, which must be fully paid within 72 months or before the 10-year collection statute expires.

The FTA policy is an administrative waiver that allows the IRS to remove Failure to File and Failure to Pay penalties for a single tax year. To qualify, you must have no penalties for the preceding three tax years, be current on all filings, and pay or arrange to pay the base tax owed. You can apply by calling the IRS directly.

Yes, but only under strict criteria. Income tax debt can be discharged in Chapter 7 or Chapter 13 bankruptcy if the taxes are for a return that was due at least three years ago, the return was filed at least two years before the bankruptcy petition, the assessment occurred at least 240 days ago, and there was no tax fraud.

A CDP hearing is a legal right that allows you to appeal proposed IRS collection actions (such as a levy or the filing of a federal tax lien) to the independent IRS Office of Appeals. You must request a CDP hearing within 30 days of the date on your Final Notice of Intent to Levy to preserve your right to appeal.

Under federal law, interest on unpaid taxes compounds daily based on the federal short-term rate plus 3%. In addition, late-payment penalties accrue at 0.5% per month (up to 25%), and late-filing penalties accrue at 4.5% per month (up to 22.5%), creating rapid compounded balance growth on unpaid liabilities.

IRS tax debt is governed by federal law and collected by the IRS. State tax debt is governed by individual state statutes and collected by state departments of revenue (e.g., California FTB, New York DTF). State collection agencies often have different statutes of limitations, and different, sometimes more aggressive, lien and wage levy powers.

While the IRS has the legal authority to levy real estate, seizing a primary residence requires written approval from a U.S. District Court judge. Because of this high legal barrier and the IRS's policy to avoid leaving taxpayers homeless, primary residence seizures are extremely rare and used only as a last resort.

Innocent Spouse Relief can relieve you of joint liability for tax, interest, and penalties if your spouse (or former spouse) improperly reported or omitted items on your joint return without your knowledge. You must establish that you had no reason to know of the understatement when signing the return.

If a creditor settles a commercial debt for less than you owe, the settled amount is generally taxable income. However, if the IRS accepts an Offer in Compromise, the settled portion of the federal tax liability is not considered taxable income, and no additional federal tax liability is generated by the settlement.