Official sources, common mistakes, and free help
Start here before you pay anyone — these are the free, official routes.
- IRS — Offer in Compromise Pre-Qualifier — The official page to check whether your numbers are in the range the IRS typically considers, at no cost.
- IRS — Online Payment Agreement — Set up an installment agreement directly, often in one session, without paying a company.
- Taxpayer Advocate Service — A free, independent office within the IRS for taxpayers facing hardship or a stuck case.
Rules, thresholds and providers described here are those of the United States.
Dates and deadlines that change your options
These are the moments where responding early keeps more of your options open.
| When | What happens |
|---|---|
| Within 30 days of a Final Notice of Intent to Levy | You can request a Collection Due Process hearing before the IRS can legally levy your wages or bank accounts. |
| Before your next tax return is due | Staying current on new filings is generally required to keep any installment agreement or Offer in Compromise application valid. |
| Ten years from the date your tax was assessed | This is generally when the IRS's legal window to collect the debt (the collection statute) expires, which affects partial-pay agreement calculations. |
| As soon as you receive any IRS notice | Responding, even to acknowledge it and ask for time, keeps the widest range of options open. |
Always confirm current dates with the official source — they move.
Checklists you can work through
Before you call the IRS or a tax professional
- Your total balance owed and the tax years involved
- Your most recent IRS account transcript
- Your last filed tax return
- A rough monthly budget: income and essential expenses
- Any notices you've received, in order
- A note of any recent life changes (job loss, illness, disaster)
Before you sign an agreement with any tax relief company
- A written fee agreement covering total cost and when it's due
- A clear answer on what you pay if the IRS rejects the case
- Confirmation of who specifically is a licensed CPA, enrolled agent, or attorney
- A specific explanation of which IRS program they believe fits your situation
- An estimated timeline for the process
- Time to compare it against the free irs.gov pre-qualifier tool
Common mistakes people make with IRS tax debt
Ignoring the first notice and hoping it resolves itself
Respond to the earliest notice you can, even just to ask about your options — it does not resolve itself and ignoring it narrows your choices.
Assuming you automatically qualify for a settlement
Run the free pre-qualifier tool at irs.gov before assuming an Offer in Compromise is realistic for your numbers.
Paying a large upfront fee before understanding what happens if the case is rejected
Ask directly what you owe the company if your Offer in Compromise is not accepted, in writing, before paying anything.
Falling behind on new tax filings while resolving old debt
Keep filing and paying current-year taxes on time — falling behind again can invalidate an installment agreement or Offer in Compromise.
Not asking about penalty abatement
Ask about first-time or reasonable cause penalty abatement before assuming your full balance, including penalties, is fixed.
Treating state tax debt the same as federal
Check your specific state department of revenue's site — state rules, forms and programs are separate from IRS rules.
Glossary
The words that get used as if everyone already knows them.
Offer in Compromise (OIC)
A formal IRS application to settle a tax debt for less than the full amount owed, based on the IRS's assessment of what it could reasonably collect.
Installment agreement
A plan to pay your full IRS balance over time in monthly payments, generally easier to qualify for than a settlement.
Reasonable Collection Potential (RCP)
The IRS's formula-based estimate of what it could realistically collect from your income and assets, used to evaluate Offer in Compromise applications.
Currently Not Collectible (CNC)
A status the IRS can assign when it determines you cannot currently pay anything toward your debt, which pauses active collection without erasing the balance.
Penalty abatement
A free request to have some or all penalties (not the underlying tax) removed from your balance, based on a clean history or documented hardship.
Notice of Federal Tax Lien
A public claim the IRS files against your property to secure its interest in an unpaid tax debt; it does not seize property directly.
Levy
The IRS's legal action to seize wages, bank funds, or other property to satisfy a tax debt, generally following a Final Notice of Intent to Levy.
Enrolled agent
A tax professional licensed by the IRS itself, authorized to represent taxpayers in all matters, including audits and collections.
Low Income Taxpayer Clinic (LITC)
An independent organization, often free for qualifying income levels, that helps taxpayers resolve disputes and applications with the IRS.
Taxpayer Advocate Service
A free, independent office within the IRS that helps taxpayers facing hardship or unresolved problems through normal channels.
Collection Due Process hearing
A hearing you can request within 30 days of a Final Notice of Intent to Levy to challenge or discuss the collection action before it proceeds.
Partial-pay installment agreement
A payment plan for less than the full balance, where the remaining amount may go uncollected once the IRS's collection statute expires.