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What to Do If You Owe the IRS $100,000 or More

What to Do If You Owe the IRS $100,000 or More

IRS tax debt of $100,000 or more can cause major financial problems and stress. These situations require creative solutions that will vary depending on your income, assets, and other factors.

IRS Actions

You may have been receiving IRS notices for several years about your tax problems. You’ve probably received bills, penalty assessments, and letters threatening to take enforced collection actions if you don’t pay.

In other cases, taxpayers can accumulate six-figure tax debt quite rapidly. Perhaps you needed to liquidate your 401(k) to pay some unanticipated expenses. Your withdrawal didn’t qualify for a statutory exception, so you owe income taxes and the 10% penalty tax on the full amount of your withdrawal.

The IRS may take any of the following actions against taxpayers who owe $100,000 or more in tax debt:

  • File a Notice of Federal Tax Lien to notify the public of your delinquent tax debt
  • Garnish your wages or seize the funds in your bank account
  • Revoke or deny your passport application
  • Offset your tax refund checks
  • Assessing penalties and interest that continue to grow

The IRS won’t stop pursuing their money until you do take action and find a solution to your tax debt issues.

Your Tax Resolution Options

The best tax resolution option will depend largely on your financial situation. Are you earning a good income, but just strapped for cash at the moment? Do you have assets to liquidate or borrow against? 

Some tax resolution options become much more manageable if you can pay off a portion of your IRS tax debt in a lump sum. For example, the IRS experimented with expanding the streamlined installment agreement program to taxpayers with balances of up to $100,000, but the regular requirement is that your balance is below $50,000.

These installment agreements can be easier to negotiate and also more flexible. If you owe over $100,000, you may want to consider selling assets or borrowing money to pay off your balance below the $50,000 threshold. Then, you can pay off your remaining balance on your payment plan.

Penalty abatement can also be a valuable option. If you owe six-figures in back taxes, it’s possible that your penalties total in the tens of thousands of dollars. Getting some of these penalties eliminated can result in big savings.

Your tax attorney should also examine all of your other tax resolution options, including Offers in Compromise and innocent spouse relief. You may need to use several different tax relief programs—as well as making some adjustments to your financial situation—but you can develop a plan to deal with IRS tax debt of $100,000 or more.

Prevent IRS collection actions by calling The Gartzman Law Firm at 770-939-7710. We can help stop bank account levies and wage garnishments before they happen and find a creative solution to your tax problems.