How to Get Help With Back Taxes

Filing yearly taxes can become a nightmare for individuals who owe back taxes—overdue local, state, or federal taxes. You may feel stressed or helpless if you don’t know how to pay your back taxes. But you’re not alone. 

We know where you can go for help with back taxes, pay them back, and avoid them in the future.

What are back taxes?

You owe back taxes if you’re facing any of these situations:

1. Can’t make full payment on current year’s return
2. Never filed or still owe for the previous year
3. Levy or lien on your assets

Any late tax you owe from a federal return or state and local levels is considered a back tax. These situations happen often. In 2022, 18.6 million Americans owed federal back taxes.

How to know if you owe back taxes

Federal, state, and local agencies mail a letter explaining how much you owe, why, and your next steps. The IRS and many state-level tax collecting agencies also have an online portal to view your tax information.

Taxpayers who owe should:

1. Respond: By mail, fax, or the IRS’ Documentation Upload Tool as soon as possible.
2. Pay: Taxpayers can set up a payment plan for help with back taxes.
3. Keep a copy of your notice/letter: There’s important information in these letters. 

Ask the expert

Natalie Slagle

CFP®

In my experience, clients who are business owners tend to be the most common individuals who owe back taxes. When you are a W2 worker, your taxes are automatically withheld and typically for the right amount. When you are a business owner or contract worker, the tax payments and responsibilities transition from your employer to you!

How to get help with back taxes

There are several options you can explore to get back tax help. 

Option to pay back taxes	Best for individuals who desire
Installment plan	To pay over time
Offer in Compromise	To settle for a lesser amount
Currently Not Collectible status	A grace period
Penalty abatement	Pardon from unintentional non-compliance
Innocent spouse relief	Release from responsibility
Bankruptcy	A fresh start
Taxpayer Advocate Service	Resolution assistance
Tax attorney	Legal counsel
Tax relief service	Professional support
Get a loan	To pay immediately

Installment plan

One way the IRS offers back tax help is through installment plans (if you’ve filed all required returns).

How it works

You can apply online and pay over a period of time or even in full.

Plan	Back tax limit	Term	Setup fee
Full payment	–	One-time payment	$0
Short-term payment	<$50,000	≤ 180 days	$0
Long-term payment	<$100,000	≥ 180 days	Online: up to $130; phone/mail/in-person: up to $225

Pros and cons

Pros

• Instant decision online

• Less financial strain

• Paid over time

Cons

• Accrued interest and penalties

• Setup fees (long-term plan)

• Options may be limited

When to consider this option

If you cannot afford to pay all at once, consider setting up a payment plan. 

Offer in Compromise

Once known as the Fresh Start Program, an Offer in Compromise (OIC) allows you to settle for less than what’s owed. 

How it works

For starters, you must be up to date on taxes and not in bankruptcy proceedings. Use the IRS’ OIC Pre-Qualifier Tool to check your eligibility.

Submit an application package that includes Form 433-A (OIC) or Form 656, a $205 application fee, and an initial payment. 

Pros and cons

Pros

• Collective action suspends

• Automatic acceptance if no decision within 2 years

Cons

• Non-refundable payments/fees

• A federal tax lien may be filed

• Liens remain until agreement is satisfied

When to consider this option

If you’ve first explored other options and can’t pay your full tax liability, or if paying would cause financial hardship, submit an OIC.

Currently Not Collectible status

If you request this status, the IRS may also offer back tax help that would delay collections until your financial situation improves.

How it works

Just call 800-829-1040 or the number on your notice to make a request. You might be asked to complete a Collection Information Statement and provide additional documentation. 

Pros and cons

Pros

• No fees

• Temporary relief from collection process

Cons

• Penalties and interest still apply

• Continual review of ability to pay

• Notice of Federal Tax Lien may be filed

When to consider this option

Consider seeking this status if you need time to get your finances back on track.

Penalty abatement

The IRS also offers back tax help through penalty abatement.

One way is through an administrative waiver that would notify eligible taxpayers via an announcement or letter.

In December 2023, the IRS announced failure-to-pay penalty relief to nearly 4.7 million filers for tax years 2020 or 2021, with an assessed tax of less than $100,000.

Two other forms of relief are:

1. Reasonable cause 
2. First-time abate

How it works

Generally speaking, you may qualify if you can show that you could not file your return or pay taxes on time or accurately while exercising prudence and have a good compliance history—generally, penalty-free during the previous three years.

To apply for First Time Abate or reasonable cause, follow the instructions from your IRS notice and call the number listed, send a written statement, or Form 843.

Pros and cons

Pros

• No fee

• Few eligibility criteria

Cons

• Substantial proof required

• Collection isn’t suspended

When to consider this option

If you failed to file, pay on time, or file accurately for good reason, requesting relief quickly may reduce your tax bill or clear it altogether.

Innocent spouse relief

You won’t be held responsible for a spouse’s tax liability if the IRS determines you’re not at fault or complicit.

How it works

You can get relief if your spouse filed an understated joint tax return and you weren’t aware of it. 

There are a few exceptions if you:

• Suffered spousal abuse or domestic violence before signing the return
• Didn’t challenge because of fear
• Signed the return under pressure/threats

An understated return is caused by:

• Unreported income
• Incorrect deductions, credits, or values given for assets

Relief is only for your spouse’s employment or self-employment income, not your own.

When applying, you may automatically receive:

1. Equitable relief—for unfair responsibility
2. Separation of liability relief—if divorced, separated, not living with a spouse anymore, or living in a community property state.

You won’t be eligible if you:

• Signed an OIC or closing agreement covering the same taxes
• Were denied relief.
• Didn’t request relief in a related court proceeding.

To request innocent spouse relief, file Form 8857 within two years of receiving notice. 

Pros and cons

Pros

• No fee

Cons

• Extensive questionnaire

• Long review process (6 months)

When to consider this option

Only consider filing for innocent spouse relief if you don’t believe you’re responsible for an understated joint return.  

Bankruptcy

Bankruptcy can provide back tax help if you’re in deep debt to the IRS. From the date you petition until the courts decide, the IRS will suspend collection from you. 

Two of the most common forms of bankruptcy for individuals are:

1. Chapter 7—Liquidates your assets to pay debts.
2. Chapter 13—Reorganizes debts to create a repayment plan over three to five years.

How it works

To be eligible for bankruptcy, you may submit to a “means test,” evaluating your income and other factors.

There’s no debt limit with Chapter 7 bankruptcy, but for Chapter 13, your debts must be less than $2.75 million when you file. 

However, you’re ineligible if, within the previous six months, haven’t taken credit counseling from an approved agency or for:

• A petition dismissed for not showing up to court.
• A petition dismissed for not complying with court orders.
• A case you voluntarily dismissed after others you owed sought relief from the bankruptcy court to recover property they placed a lien on.

You’ll need to file a petition with a bankruptcy court in your area, along with several documents:

1. Assets and liabilities
2. Current income and expenses
3. Financial affairs
4. Executory contracts and unexpired leases
5. Most recent tax return

With permission, you can pay filing fees over four installments or less:

Bankruptcy	Case filing fee	Miscellaneous administrative fee
Chapter 7	$245	$75
Chapter 13	$235	$75

Pros and cons

Pros

• Collection suspended

• Fresh start

Cons

• Possible asset liquidation

• Relatively short repayment plan terms

When to consider this option

You may decide to consider bankruptcy if your financial obligations and debts would make it overwhelmingly difficult to afford to live. 

Filing should never be an option hastily chosen just to get out of paying back taxes.

According to the Consumer Financial Protection Bureau, bankruptcy can remain on your credit report for up to 10 years. A bad credit history can be a difficult obstacle to overcome if you want to purchase a home or achieve other milestones. 

Taxpayer Advocate Service

As your “voice at the IRS,” the Taxpayer Advocate Service (TAS) ensures you understand your rights and are treated fairly. The TAS is an independent organization within the IRS. And its advocates can provide back tax help with issues you can’t resolve yourself.

How it works

The organization provides the TAS Qualifier Tool on its website, but a TAS advocate will ultimately decide whether you qualify. 

TAS offers a few ways to request assistance:

1. Download the Form 911 (easiest method)
2. Contact the Centralized Case Intake (CCI) toll-free number at 877-777-4778
3. Contact your Local TAS Office

If you qualify, you’ll get help from an assigned TAS advocate to help you solve your problems with the IRS. 

Separate from the IRS and TAS is the Low-Income Taxpayer Clinic (LITC). It serves low-income individuals needing resolution to a dispute with the IRS.

2024 income ceiling (250% of poverty guidelines for eligibility)

Size of family	48 contiguous states, Puerto Rico, and D.C.	Alaska	Hawaii
1	$ 37,650	$ 47,025	$ 43,275
2	$ 51,100	$ 63,850	$ 58,750
3	$ 64,550	$ 80,675	$ 74,225
4	$ 78,000	$ 97,500	$ 89,700
5	$ 91,450	$ 114,325	$ 105,175

To find a local LITC, you’ll need to click on Resources for Taxpayers, then the LITC option through the TAS website. 

Pros and cons

Pros

• Low-cost professional help

• Two-week review process (mail)

• Local offices across U.S.

Cons

• High call volume

• Longer review process (phone requests)

When to consider this option

If you’re going through financial hardship and haven’t been able to resolve your back taxes with the IRS, consider requesting help from TAS or LITC. 

Tax attorney

A tax attorney has plenty of experience settling tax issues and understanding tax codes and can be a smart move if you need back tax help. 

A tax attorney can help with:

• Challenging IRS rulings in court
• Halting wage garnishment
• Undoing property liens
• Removing account levies
• Negotiating compromises with the IRS

In your initial meeting with an attorney, you might discuss your back taxes, financials, and answer several questions.

Finding a tax attorney can be overwhelming. So, don’t rush and hire the first one you find. First, read what you should look for in a tax attorney.

Pros and cons

Pros

• Access to a legal expert

• Peace of mind

Cons

• More costly alternative (fees vary from hundreds to thousands of dollars)

• Many services can be done yourself

When to consider this option

If the IRS has taken action, such as issuing a levy/lien or threatening jail time, it may be best to contact an attorney who can provide any legal counsel and documentation needed. 

Check out our guide for when to hire a tax attorney.

Tax relief service

A reputable tax relief service may be able to provide the back tax help you need if you want to be able to speak with tax professionals who can offer guidance and support. 

How it works

Many legitimate tax relief services provide a free consultation, have federally licensed experts, and offer a money-back guarantee within a certain time frame. But do diligent research.

Many of their services can be done on the IRS’ website on your own or with the help of a TAS advocate. As you research companies, look out for red flags: 

• Promises that say you “qualify” for a tax relief program
• Whole fees upfront
• Pricy monthly “maintenance fees” 
• Claims about other customers’ experiences

We’ve done our own research and found the best tax relief services around. 

Pros and cons

Pros

• Quicker resolution

• Hands-on guidance and support from an expert

• Peace of mind

Cons

• Many services offered can be done yourself

• More costly alternative (~$1,000)

• Hypervigilance for scams required

When to consider this option

If you are overwhelmed by your situation and unsure if you’ll be able to handle a tedious process, then you may consider contacting a company backed by licensed experts. 

Get a loan

Quick back tax help can also come from a friend, family member, or a personal loan—installments paid monthly. You can use personal loans for many different purposes, and you get a lump sum upfront.

In some cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law. Personal loans often set fixed interest rates from 7.49% to 35.99%. 

How it works

Plenty of lending companies, banks, and credit unions offer personal loans.

Before looking for one, check your credit score. Your score influences whether you get the loan and at what interest rate.

Decide how much you’ll need and can afford. In addition to interest, lenders can tack on other initial fees. As you shop around and compare lenders’ rates, you’ll also need to consider how much you can afford.

We’ve reviewed several lenders and determined some of the best personal loans for borrowers. Typically, once you decide on a lender, you can receive an instant decision when you apply online. 

Pros and cons

Pros

• Lump sum payment

• Quick resolution

Cons

• Retroactive interest after introductory period

• Replaces tax debt with personal loan

When to consider this option

If you want to quickly pay your tax debt without incurring additional penalties, interest, or fees from the IRS, you may consider a personal loan or even a credit card—as many also offer zero-interest introductory periods. 

However, you’ll just be trading one debt with interest for another debt with interest—going from bad to worse.

Don’t rush your decision because you’re feeling pressure. Consider whether the help with back taxes you need should involve a personal loan or asking someone close who wouldn’t charge you interest as you repay them. 

What happens if you don’t pay back taxes?

State and local tax collection agencies can charge delinquent taxpayers penalties and take aggressive measures, such as suspending your driver’s license.

The IRS starts by assessing penalties and interest, and can eventually garnish your wages, or assess a lien or levy. 

A lien claims a legal interest in your assets, while a levy means legally taking your property to satisfy your taxes owed. 

Jail time is an extreme resort but very possible for:

• Tax fraud
• Tax evasion
• Not filing your tax returns

However, federal law prevents the IRS from collecting taxes you owe after 10 years. It’s called the Collection Statute Expiration Date (CSED). But it’s not a permission slip to avoid paying up. 

There are plenty of examples that could add time to the CSED, such as requesting an installment agreement, filing for bankruptcy, or submitting an OIC.

How to avoid owing back taxes in the future

Be sure to file your return accurately and pay on time. Also, remember to “Pay as you go so that you won’t owe.” 

There are two ways to pay your taxes as you go:

• Withholding from your paycheck, pension, Social Security, etc.
• Paying taxes every quarter.

Check your withholding often and using the Tax Withholding Estimator to adjust your W-4 and give it to your employer accurately. 

Quarterly estimated tax payment due dates

April 15; June 15; September 15; January 15 of the following year (if due date is on a weekend or holiday, payments are due the next business day)

You can pay your quarterly taxes using Form 1040-ES or online, over the phone, or from the IRS2Go app.

Always address any correspondence you receive in the mail from the government about taxes due, and follow the instructions. Especially if you’re audited, the IRS looks more closely into your tax returns due to random selection or suspicions of false or erroneous information.

Read more about IRS audit penalties or about where to find tax audit representation, if you need a better understanding of audits or how to get help.

Bottom line: Even if you cannot afford to pay your tax bill, the best action you can take is to communicate with the IRS and/or governmental agency. They’re typically willing to work with you if you’re honest and follow their instructions.

Ask the expert

Natalie Slagle

CFP®

My first recommendation when dealing with tax debt is to adjust your tax withholding or payment process for the current year. This is because you need to prevent the problem from getting worse before you address the damage that has already occurred. Once you have developed a plan to better plan and pay your tax obligations for the current year, you can review all of your options for previous years in which you owe back taxes.

FAQ

Can I negotiate my back taxes with the IRS?

Typically, the IRS does not negotiate the amount of back taxes owed. However, in certain instances, the IRS provides particular avenues for taxpayers who can’t meet their tax obligations. These may include offers in compromise, installment agreements, or temporary collection delays.

What is the Fresh Start program, and am I eligible?

The Fresh Start program is an IRS initiative to help struggling taxpayers resolve their tax debt. It accomplishes this via lien withdrawals, installment agreements, and Offer in Compromise terms. To qualify, you need to show paying your tax debt would result in financial hardship. Eligibility is determined on a case-by-case basis.

How do I set up an installment agreement with the IRS for my back taxes?

You can initiate an installment agreement with the IRS online via the IRS website. You’ll need to provide financial information and specify your monthly payment amount and due date. It’s best to consult a tax professional before entering into an agreement.

What are the consequences of ignoring back tax notices from the IRS?

Ignoring back tax notices from the IRS can lead to serious ramifications. The IRS may impose penalties, charge interest on your outstanding balance, or place a lien on your property. In extreme circumstances, it could lead to the seizure of assets or criminal charges for tax evasion.

Is there a statute of limitations on back taxes?

The IRS typically has up to 10 years to collect unpaid taxes. However, this statute of limitations can be extended under specific circumstances, such as if you agree to a payment plan or file for bankruptcy.

What should I do if I can’t afford to pay any of the back taxes I owe?

If you’re unable to pay any of your back taxes, it’s critical to contact the IRS or a tax professional. Programs such as an Offer in Compromise can assist, and an experienced tax professional can guide you in navigating your options to resolve your tax debt.