Tax Debt

Federal Congressmen introduced a bill on March 22, 2012 that would prohibit the Internal Revenue Service from taxing settlements awarded to anyone wrongfully convicted of a crime and then exonerated later. These wards are typically paid out by the State or City who wrongfully convicted the person.

If you owe back taxes, the Internal Revenue Service offers a Fresh Start initiative that makes it easier to pay back taxes and avoid tax liens. This program can benefit small business taxpayers and individual taxpayers and 1) help back taxes, and 2) give some certainty to your tax problem.

Many of our clients who owe the IRS or NYS for unpaid back taxes have us set up tax installment agreements, which are paid monthly to satisfy the tax debt. The terms of these agreements require the taxpayer to stay in compliance by paying all taxes owed on time, filing all tax returns promptly, and avoiding new unpaid tax liabilities.

Under the tax law, filing for bankruptcy is one way to reduce or even eliminate your tax liabilities, but often it is not the best solution for our clients. In response to the question can you file bankruptcy on IRS debt? In general, there are two different types of bankruptcy, liquidation or “straight bankruptcy” (Chapter 7) and reorganization (Chapter 11 or Chapter 13).

While involved with an IRS collection case, for matters over $50,000 the IRS will ask for a 433-F form to be completed, which is a financial disclosure of your assets and income, or a form 433-A/B form (a variety of the 433-F form) if an IRS Revenue Officer is assigned to your case. From the clients perspective they often under-estimate the importance of this form, and its proper preparation.

The Internal Revenue Service was given a new power in 2015 known as the IRS Passport Cancellation Power under new legislation to deny, rescind, or limit a passport of anyone who owes the IRS more than $62,000 (adjusted for inflation). This threshold amount includes both taxes, interest and penalties.

Few things create as much anxiety as getting a call or letter from a debt collector. When that debt involves unpaid federal taxes, the fear can multiply fast. The good news is that even when your IRS tax debt is turned over to a private collection agency, you still have legal protections, rights, and workable options to resolve it.

No taxpayer wants to get into the IRS tax debt and need a tax debt settlement. Still, every year thousands of taxpayers get into it due to different reasons. And once they get into it, their tax debts keep increasing day-by-day with the addition of penalties and interests. At some point, if the IRS tax debts are not paid, they get double and become an unwanted burden for the taxpayers.

Generally, IRS tax debt expires after 10 years. This means the IRS can no longer collect the debt through methods like wage garnishments or bank levies once this period passes, unless they obtain a court judgment.

One of the most common and pressing questions taxpayers ask when facing back taxes is: How long can the IRS collect the money I owe? It’s a fair concern, especially when penalties and interest accumulate and the IRS’s collection powers seem endless. Fortunately, there are legal limits in place—specifically, what is known as the IRS Statute of Limitations on Collection.

No one likes to carry any kind of debt on them, especially when it is the debt of unfiled taxes for which you might have to pay huge penalties and even go to jail (in very limited cases). So, it is never too late to correct your mistakes and speedily file the tax returns and get the situation under control.

The New York Voluntary Disclosure Program helps taxpayers who failed to file returns and owe back taxes avoid penalties and criminal charges. To be eligible, taxpayers must disclose unfiled returns and tax amounts owed, pay back taxes, and enter into a payment agreement for future taxes. The program excludes taxpayers under audit, criminal investigation, or those who received a tax bill.

The Internal Revenue Service has many different options for people who get behind on their taxes. But to request help, you need to file the right forms. This guide provides an overview of the relief forms you need to file based on the resolution option you want to pursue. Keep in mind that in some cases, you may need to apply for multiple programs.

CP501 is one of the first notices that you will receive if you owe taxes to the IRS. Usually, the agency sends out CP501 notices to taxpayers whose accounts are in the automated collection system (ACS). In contrast, other notices, such as the CP14, may come from the ACS or a revenue officer.

Owing money to the IRS can be extremely stressful, but the situation is even more stressful when you owe into the six figures. When you owe this level of tax debt, you may be worried that the IRS is going to come after you, and there's a pretty significant possibility of that happening.

The IRS sends a CP523 notice to taxpayers who have defaulted on their installment agreements, which are monthly payment plans set up to pay off tax debt. This can happen for a variety of reasons, including missed payments, failure to file tax returns, unpaid taxes, or not responding to IRS requests for financial information.

When it comes to taxes, one of the few things that is worse than getting an unexpected letter is getting an unexpected visit from the IRS at your home or place of business. If you're not prepared, a surprise visit from someone you like can be unsettling. Now, imagine a visit from an IRS employee who wants to review your financial records and collect money from you.

Navigating federal back taxes can be daunting, to say the least. If you’ve got unpaid or unfiled taxes to deal with, it’s natural to feel some stress about the possible repercussions. The first step forward is understanding how long it takes for the IRS to initiate collection actions for back taxes.

Tax season is often met with anticipation as individuals eagerly await their tax refunds. However, some taxpayers may find that their refunds are less than expected or even reduced to zero. This occurrence may be attributed to the Treasury Offset Program (TOP), a mechanism through which the Department of Treasury's Bureau of the Fiscal Service (BFS) can intercept refunds to offset certain debts owed by taxpayers.

An IRS Notice of Deficiency (Notice 3219A) is an official letter stating that you owe additional tax, which may include penalties and interest. It outlines the proposed adjustments and gives you 90 days to respond. Typically, you’ll receive IRS notice CP2000 first about a possible discrepancy. Form 5564, a waiver, comes with Notice 3219A.

New York State taxpayers who are unable to satisfy their tax payment or filing obligations may face consequences such as tax warrants, wage garnishment, asset seizure, and penalties. Relief options include requesting penalty abatement, setting up monthly payment plans, exploring the Offer-in-Compromise program, filing for Innocent Spouse Relief, and utilizing the Voluntary Disclosure Program.

After three years, unclaimed refunds are forfeited, and the IRS can take collection actions, including liens and levies once there is an unpaid tax bill and a certain amount of time has passed.

IRS Form 433-F (Collection Information Statement) is used to gather detailed financial information about taxpayers applying for specific tax relief programs. The form helps the IRS determine eligibility for alternative payment plans, including partial payment installment agreements and payment plans for high-balance tax bills.

The IRS has the authority to freeze funds in a taxpayer's bank account up to the amount of their tax debt. The IRS typically sends multiple notices before levying an account, giving the taxpayer time to address the issue. There are various reasons for the IRS to freeze an account, such as significant tax debt, non-compliance, or fraudulent activity.

Individuals who intentionally evade taxes can face criminal charges and potentially go to jail. Tax fraud and tax evasion are felonies, with penalties including fines and imprisonment. Nearly two-thirds of people convicted of tax fraud receive prison sentences, averaging 16 months. The IRS Voluntary Disclosure Program allows taxpayers to file back taxes and avoid prosecution if they voluntarily disclose their failure to file and make an honest attempt to pay.

The IRS can garnish wages to collect past-due taxes if taxpayers fail to pay or make payment arrangements. The amount of garnishment depends on factors such as wages, pay cycle, tax filing status, and dependents. The IRS follows specific rules, allowing them to garnish a substantial portion of a paycheck.

Yes, the IRS can take your 401(k) for taxes owed if you fail to pay your taxes in full and on time. The IRS has broad authority to levy assets, including retirement accounts, to collect unpaid taxes. However, the IRS generally only takes this action as a last resort after other collection efforts have failed.

Surviving spouses may be responsible for their deceased spouse's tax debt if they filed a joint tax return or live in a community property state.

When an IRS representative contacts you directly to discuss your taxes—whether it’s a specific return, the results of an audit, or a past-due tax debt—it’s important to know the scope of their work and what they are legally allowed to do in regards to your tax debt.

If you’re requesting certain forms of tax relief from the IRS, they may want to verify your financial information. Depending on the type of relief you are asking for, they either want to see if you are able to make the monthly payments you’re requesting or if you have enough financial need for the assistance you are asking for.

If you fall behind on your New York State taxes, file incorrectly, or engage in fraud, the Department of Taxation and Finance (DTF) may add a wide range of penalties to your tax bill. By understanding the penalties you may be charged and learning more about the Department’s expectations for taxpayers, you can stay compliant with all state tax requirements and minimize the risk of penalties.

After state taxes have been assessed, the Department of Taxation and Finance (DTF) can only collect taxes for a set period of time. In New York State, the statute of limitations is generally 20 years. However, there are exceptions, and the starting point for the 20 years depends on the specific details of your tax situation.

In New York, the Department of Taxation and Finance (DTF) has the right to hold individuals responsible for unpaid sales or withholding taxes. The state is willing to go after individuals who have the authority and responsibility to track, calculate, withhold, deposit, or otherwise remit the business's sales or payroll taxes to the NYS DTF.

Since 2013, the number of federal employees with tax debt has risen to about 6% (5% or more of congressional employees and about 4% of White House staff). In the spring of 2025, the IRS sent letters to 525,000 federal employees and retirees with a dire implication: If you don’t reconcile your outstanding taxes, you could jeopardize your job.

If you owe taxes to the New York Department of Taxation and Finance, they may seize your assets. The DTF's asset seizure process is slightly different from the IRS's, but in both cases, they can take a significant portion of your assets. To protect your assets, you need to know what the DTF can legally seize and how to respond when you receive a levy (seizure) notice.

You could lose your passport over unpaid taxes. Unpaid federal tax debt can lead to restrictions and revocation of your passport, making it impossible for you to travel to visit family or work. IRS passport revocation is indirectly possible, meaning that while the IRS cannot outright revoke your passport, it can take steps that trigger the U.

IRS tax assessment and enforcement actions typically follow strict protocols and procedures. The agency sends letters, gives taxpayers time to respond, and eventually moves on to liens, levies, and seizures. The entire process takes months, giving taxpayers plenty of time to question the amount owed, come up with payment arrangements, and otherwise avoid aggressive collection efforts.

Yes, you can sell a home even if it has an IRS tax lien against it. However, there will be extra paperwork involved, and the IRS will have a right to the proceeds of the sale, up to the amount of your tax debt. There are a few different ways to navigate the sale, depending on the situation.

It depends – in some cases, the IRS can take your spouse's income for your tax debt, but they can't in other situations. Ultimately, it boils down to which type of return you filed, how much your spouse earns, and what you've done to resolve the debt.

When someone owes back taxes to the IRS and tries to transfer assets, the consequences can be severe for both the person who owed the taxes (the transferor) and the person or entity who received the assets (the transferee). The IRS and other taxing authorities possess sweeping powers to trace, reclaim, and penalize improper asset transfers meant to sidestep tax debts.

If you have unpaid taxes or haven’t filed your returns, the IRS will start sending you notices asking you to get back into compliance. If you don’t resolve your issue after receiving notices, you may get CP504B. This is a notice for businesses, indicating that the IRS will levy assets if the amount owed isn’t paid immediately.

The New York Department of Taxation and Finance (NYS DTF) can file a tax warrant against you if you have delinquent income tax, sales tax, or other New York State taxes. A tax warrant is the first collection action taken by the state.

If you're wondering, "I owe $10k in taxes, what should I do?" you're definitely not alone — and more importantly, there's a way out. While the IRS takes a debt of this size seriously, the agency has programs to help you resolve your tax debt.

You may have heard that the Fresh Start Program is a way to pay less than what you owe on your taxes, spread payments out over time, or delay payments. In some ways, that’s true, but the IRS Fresh Start program isn’t a special IRS-approved program that you need to apply for.

The IRS sends its most serious notices through certified mail, and ignoring these letters will not protect you. Certified mail from the IRS typically threatens actions like wage garnishments, asset seizures, tax assessments, or criminal exposure. Whether you open the letter or not, the IRS will move forward if you don't respond by the deadline.

If you owe taxes to both the IRS and New York State, you need to make payment arrangements separately with these agencies. You also need to be aware of their unique collection processes, so that you know what to expect and how to resolve your tax debt strategically.