How to Deal with IRS Debt: 7 Key Strategies to Take Back Control
Jim Payne • October 21, 2025
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Owing the IRS can feel overwhelming, but you’ve got options—and it’s not all bad news. The IRS offers several legitimate ways to resolve or reduce your tax debt, and understanding these strategies is the first step toward taking back control. Here's a quick overview of the main approaches, each of which we'll dive into deeper in upcoming posts.
- Offer in Compromise (OIC)
An Offer in Compromise lets you settle your IRS debt for less than the full amount you owe. It’s not for everyone—there are strict eligibility requirements and financial disclosures—but if you truly can’t pay in full, this could be your lifeline. - Installment Agreement (Payment Plan)
If you can’t pay your balance all at once, an installment agreement allows you to pay it off over time. There are several types—from streamlined plans to full financial disclosures—and each comes with different terms depending on how much you owe and how quickly you can pay. - Currently Not Collectible (CNC)
When you're facing serious financial hardship and can’t afford to pay anything right now, the IRS may place your account in Currently Not Collectible status. This doesn’t erase your debt, but it puts collections on pause—no levies or garnishments while you get back on your feet. - Audit Reconsideration
Think the IRS got it wrong during an audit? Audit reconsideration is a chance to challenge the results. You’ll need to provide new evidence or explain why the original outcome was inaccurate. - Innocent or Injured Spouse Relief
If your tax debt is due to your spouse’s (or ex-spouse’s) actions, you may qualify for relief. Innocent Spouse Relief separates your liability, while Injured Spouse Relief helps you reclaim your share of a refund that was applied to your spouse’s debt. - Taxpayer Advocate Service
When you’re stuck and the IRS isn’t responsive or is causing financial harm, the Taxpayer Advocate Service can help. They’re an independent part of the IRS that steps in when you can’t get a resolution through normal channels. - Boost Your Income
Sometimes the most practical solution is to make more money—especially if you're running a business. Streamlining operations, raising prices, or finding new revenue streams can make IRS debt more manageable and easier to eliminate.
No matter your situation, the IRS has processes in place to help. Stay tuned as we break down each of these options in detail—so you can make the best decision for your financial future.
Services for Real Estate Pros with Backoffice Squared March 11, 2025 07:30 AM No one wants to deal with an IRS audit, but here’s the good news: the chances of facing one are shrinking. Traditional IRS audits will become rarer due to recent layoffs and a shift toward automation. And with the right strategy, you can make tax season even easier for yourself.
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Here’s one of my predictions for the next few years—thanks to recent IRS layoffs and ongoing staffing shortages, more Offers in Compromise (OICs) are going to slip through the cracks. And when that happens, some taxpayers might see their tax debt automatically settled without the IRS ever reviewing their case. Sound too good to be true? It’s not. There’s a little-known rule that works in your favor:
Owe the IRS more than you can afford? An Offer in Compromise (OIC) might let you settle for less than the full amount . Sounds great, right? Well, the IRS doesn’t make it easy. Most OICs get rejected because people don’t understand the process or submit unrealistic offers. Here’s how to do it right and boost your approval chances.
If you’ve received an IRS Final Notice of Intent to Levy (Letter 1058 or LT11) , you might be wondering just how "final" it actually is. The short answer? It’s pretty serious, but you still have options— if you act fast . Let’s break it down.
Many taxpayers assume cryptocurrency is hard for the IRS to track. That assumption is flat-out wrong. The IRS has been aggressively gathering information on crypto users for years. If you lie about your holdings on Form 1040 (your tax return) or Form 433 (used when negotiating tax debts), you’re putting yourself in a very weak position when dealing with the IRS.
Filing a joint tax return with your spouse has its perks—like better tax rates and deductions—but it also means both of you are responsible for any taxes owed . That’s all fine and dandy when everything is on the up and up. But what if your spouse (or ex-spouse) messes up the taxes or straight-up lies on the return, and now the IRS is coming after you? That’s where Innocent Spouse Relief comes in. The IRS knows that sometimes one spouse isn’t at fault, and they offer three different types of relief to help people get out of unfair tax debt . Let’s break them down in plain English.
