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What to Do If You Owe the IRS $25,000 or More

What to Do If You Owe the IRS $25,000 or More

Some important IRS rules apply to tax debts of $25,000 or more. This balance includes the total amount of back taxes, interest, and penalties you owe to the IRS.

You may qualify for certain IRS tax resolution options if you are able to pay your balance down to below $25,000.

Streamlined Installment Agreements

One important option offered to taxpayers who owe $25,000 or less to the IRS is the streamlined installment agreement program. 

Streamlined installment agreements offer the following benefits:

  • You can submit your installment agreement request without being required to complete a Collection Information Statement
  • The IRS doesn’t need to make a determination of whether to file a Notice of Federal Tax Lien (NFTL) against you

The Collection Information Statement requires detailed financial information about your assets, debts, expenses, and income. The NFTL is a public notice to other creditors that the interest has an interest in your property.

Federal Tax Lien Withdrawal

If an NFTL has already been filed against your property, you can ask the IRS to withdraw it if you meet the following conditions:

  • Your balance is under $25,000
  • You’ve entered into a Direct Debit Installment Agreement
  • You’ve made at least three consecutive direct debit payments on time and in full
  • The full balance will be paid off within 60 months or before the collection statute expiration date, whichever comes first
  • You must be in full tax compliance and have no previous defaults on a Direct Debit Installment Agreement

Reducing Your Balance

If you want to request a lien withdrawal or a streamlined agreement, but your balance is currently over $25,000, you may be able to reduce your balance in several ways:

  • You can make a lump-sum payment to get your balance under $25,000
  • You may qualify for penalty abatement, which could eliminate some penalties from your balance
  • You may qualify for innocent spouse relief for some of your tax debt

Streamlined installment agreements may also be an option for taxpayers with balances up to $50,000 if they pay by direct debit and meet other requirements. The IRS also experimented with expanding the criteria for streamlined installment agreements in 2018 to include new criteria for balances between $25,001 to $50,000 and balances between $50,001 and $100,000. These changes could result in a permanent change to the streamlined installment agreement rules at a later date.

If you owe $25,000 or more in IRS tax debt, contact a tax attorney to discuss your tax resolution options.

The Gartzman Law Firm offers delinquent tax return preparation and tax settlement help for both federal and state tax debt. Use our contact form to request a consultation with an Atlanta tax resolution attorney.