Payment plans, offers in compromise, hardship status, and penalty relief, matched to your filed returns and your real numbers. The IRS decides the outcome, so we don't promise one.
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Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last updated November 1, 2026. Taxstra is a CPA firm serving 1,000+ clients in all 50 states.
Quick answer
Most IRS debt cases come down to four options. If you can pay over time, it's an installment agreement. If you can't pay in full, it may be an offer in compromise. If paying creates hardship, it may be currently not collectible status. Penalty abatement can sit on top of any of them. Missing returns usually come first.
01
Who We Help
People with real income and a tax problem that got ahead of them
IRS debt often has an ordinary cause: income with no withholding, a big equity or sale year, or a return that never got filed. We work with:
1099 physicians and locum tenens doctors who fell behind on estimated payments or have returns across several states
Consultants, contractors, and small business owners with unpaid balances from self-employment income
Real estate investors with a balance from a sale, or rental activity that was never reported correctly
Tech workers whose RSU or stock option income was under-withheld
Anyone holding a CP504, a final notice, or a levy who isn't sure which option fits
You don't have to pick a program by name. These are the rules the IRS publishes today, and they're general: whether you qualify depends on your facts.
OptionInstallment agreement Monthly payments on the full balance
Who generally qualifiesShort term: individuals who owe less than $100,000 and can pay within 180 days. Simple plan: individuals who owe $50,000 or less in assessed tax, penalties, and interest and are current on filing and payments. Most taxpayers get up to 10 years, with no collection information statement. Larger balances can still apply by Form 9465 or phone.
What to knowInterest and some penalties keep running. Online long-term setup costs $29 with direct debit or $69 without, with lower or waived fees for low-income filers.
OptionOffer in compromise Settling for less than the full balance
Who generally qualifiesYou must file all required returns, make required estimated payments, and not be in an open bankruptcy. Employers must also make federal tax deposits for the current and last two quarters. The IRS looks at income, expenses, and asset equity.
What to knowThe application fee is $205 plus a first payment (20% of a lump-sum offer), unless you meet the low-income rules. The IRS generally declines an offer if a payment plan or asset equity could pay the debt in full.
OptionPenalty abatement Removing eligible penalties, not the tax
Who generally qualifiesCompliance history: timely filing and payment for the prior three years, or 12 quarters for quarterly filers. The Automatic Exemption from Penalty covers eligible 2025 and later annual returns and 2026 and later quarterly returns; First Time Abate covers earlier periods on request. Reasonable cause: facts such as a fire, a natural disaster, or a serious illness.
What to knowLack of funds alone isn't reasonable cause, and reasonable cause doesn't apply to the estimated tax penalty. Returns filed once or infrequently are excluded from compliance-history relief.
Installment agreement Monthly payments on the full balance
Short term: individuals who owe less than $100,000 and can pay within 180 days. Simple plan: individuals who owe $50,000 or less in assessed tax, penalties, and interest and are current on filing and payments. Most taxpayers get up to 10 years, with no collection information statement. Larger balances can still apply by Form 9465 or phone.
Interest and some penalties keep running. Online long-term setup costs $29 with direct debit or $69 without, with lower or waived fees for low-income filers.
Offer in compromise Settling for less than the full balance
You must file all required returns, make required estimated payments, and not be in an open bankruptcy. Employers must also make federal tax deposits for the current and last two quarters. The IRS looks at income, expenses, and asset equity.
The application fee is $205 plus a first payment (20% of a lump-sum offer), unless you meet the low-income rules. The IRS generally declines an offer if a payment plan or asset equity could pay the debt in full.
Penalty abatement Removing eligible penalties, not the tax
Compliance history: timely filing and payment for the prior three years, or 12 quarters for quarterly filers. The Automatic Exemption from Penalty covers eligible 2025 and later annual returns and 2026 and later quarterly returns; First Time Abate covers earlier periods on request. Reasonable cause: facts such as a fire, a natural disaster, or a serious illness.
Lack of funds alone isn't reasonable cause, and reasonable cause doesn't apply to the estimated tax penalty. Returns filed once or infrequently are excluded from compliance-history relief.
Searching for Fresh Start? The IRS's current tax debt page lists these options and doesn't list a Fresh Start application. Our IRS Fresh Start Program guide explains how the name maps to each one.
Not sure which option fits your IRS debt?
A free 30-minute call with our team about your needs, how we can help, and whether we are a good fit.
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Tax planning slots are limited before year-end.
03
What to Do After a CP504 or Levy Notice
The notice code tells you how much room you have
If you have a CP504
A CP504 is a Notice of Intent to Levy under Internal Revenue Code section 6331(d). The IRS can take your state tax refund at this stage, and it may also file a federal tax lien. Don't wait on it:
Compare the balance to your own records and your IRS online account. If you disagree, call the number on the notice.
Pay what you can now, since penalties and interest keep adding up.
File any missing returns, then request a payment plan if you can't pay in full.
Follow the notice's instructions if you want to appeal through the Collection Appeals Program before collection action.
This one has a hard deadline. You have 30 days from receipt to request a Collection Due Process hearing on Form 12153. The IRS must deliver this notice at least 30 days before a levy, so treat it as your last clear window. Our LT11 and Letter 1058 guide walks through the hearing request.
If a levy has already hit
Contact the IRS right away and ask for a release. By law, a bank surrenders levied deposits only after 21 days, so a bank levy gives you a short window. The IRS says it must release a levy in situations including these:
You paid what you owe
The collection period ended before the levy was issued
Releasing it will help you pay your taxes
You enter an installment agreement whose terms don't allow the levy to continue
The levy keeps you from covering basic living costs
The property is worth more than you owe and releasing it won't hinder collection
If the IRS denies the request, you can appeal. For the full list of letters, see the IRS notice guide.
Watch Out
Check the letter itself
Your notice controls the date and the options. Rules on this page are general, and a different notice code can mean a different procedure.
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How the Process Works
Confirm the facts, get compliant, then request a resolution
Free 30-minute call. You talk with our team about what you need and whether we're a fit. Advice and document review come after you engage us.
Authorization. You sign Form 2848, which lets us act as your representative before the IRS on the matters listed.
Transcripts. We pull your IRS records to see the balance, the assessed years, and what the IRS thinks is missing.
Compliance. We prepare missing returns and get current-year withholding or estimated payments on track.
Request. We submit the option your numbers support and handle the IRS follow-up. The IRS makes the decision.
After. We set up the estimated payments or withholding that help keep the agreement from defaulting.
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Fees
What we charge and what the IRS charges are separate
Tax resolution work is typically billed at an hourly rate, based on the level of staff the work needs.
IRS charges are separate from any professional fee: the payment plan setup fees and the offer in compromise application fee are listed in the options table above. The first 30-minute call is free.
Pick a time that works
Book your free 30-minute IRS debt tax fit call
Tax planning slots are limited before year-end.
A free 30-minute call with our team about your needs, how we can help, and whether we are a good fit.
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06
IRS Tax Resolution FAQs
What is IRS tax resolution?
Tax resolution is the work of getting an unpaid IRS balance or collection case into a status the IRS accepts: a payment plan, an offer in compromise, a hardship delay, penalty relief, or some combination. It usually starts with confirming the balance and filing any missing returns.
Do I have to file missing returns first?
Usually, yes. The IRS says most payment plans and relief options require all returns to be filed, and you can file without paying the full amount. An offer in compromise specifically requires all required returns and estimated payments.
What is the difference between a CP504 and a final notice of intent to levy?
A CP504 is a notice of intent to levy that can reach your state tax refund. Before the IRS levies other property, it generally must send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, such as an LT11 or Letter 1058, at least 30 days ahead. You have 30 days from receipt of that final notice to request a Collection Due Process hearing on Form 12153.
Does a payment plan stop penalties and interest?
No. The IRS says interest and some penalty charges keep adding to the balance until it is paid in full. A plan makes the debt payable over time; it does not freeze it.
Can a CPA represent me before the IRS?
Yes. The IRS says CPAs, enrolled agents, and attorneys have unlimited representation rights, including on payment and collection issues. You authorize a representative for specific matters and tax years on Form 2848.
Can you promise to settle my debt for less?
No, and nobody else can either. The IRS decides, based on your income, expenses, and asset equity. It generally will not accept an offer if you can pay in full through a payment plan or equity in assets. For many taxpayers, a payment plan plus any available penalty relief is the realistic result.
What happens on the free call?
It is a 30-minute conversation with our team about what you need, how we can help, and whether we are a good fit. Reviewing your notices or transcripts, testing eligibility, and giving advice happen after you engage us.
