What should I do if I owe the IRS?

If you owe the IRS more than you can afford to pay, you still have legal rights, including the right to request a “collection alternative.” That means something other than immediately paying the full debt.

Collection alternatives include:

  1. Installment agreements: You can make a monthly payment plan to pay down your debt over time. Call the number on your most recent notice, or apply online at https://www.irs.gov/payments/online-payment-agreement-application. If the IRS is demanding a monthly payment too high for you to afford, contact Philadelphia Legal Assistance. Our Taxpayer Support Clinic may be able to help.
  2. Currently Not Collectible: If you can’t afford to make any payments right now, you can get the IRS to put your account in a Not Collectible status. Sometimes the IRS calls this Hardship Status.  You will still owe the debt, but the IRS won’t try to collect it from you while you are suffering financial hardship, except by taking refunds. Many people can successfully get this status on their own. Find out how at: https://philalegal.org/resources/currently-not-collectible
  3. Offer In Compromise: An Offer In Compromise means settling your IRS debt for less than the full amount, based on what you are able to afford. An Offer In Compromise takes a long time and involves a lot of paperwork, but it can let you settle your IRS debt for a small amount. To find out if this collection alternative is right for you, check out this video from the Taxpayer Advocate Service https://www.youtube.com/watch?v=s4Pd7ukl4lE and check out the IRS pre-qualifier tool https://irs.treasury.gov/oic_pre_qualifier/.  If you have questions, contact Philadelphia Legal Assistance to see if our Taxpayer Support Clinic can help.


Whichever option you choose…

  1. Know what to expect: check out our IRS Myths and Facts webpage https://philalegal.org/resources/irs-myths-and-facts
  2. Remember that the IRS makes mistakes. If you got a letter from the IRS saying you owe taxes, but you think the amount may not be correct, contact Philadelphia Legal Assistance for help.
  3. Only pay people you trust. Philadelphia Legal Assistance can help many people for free, but if you go to a private tax resolution company, read reviews first, and be on the lookout for scams and rip-offs.  We’ve seen people pay thousands of dollars to private companies that don’t really do much to help.