Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Personal Finance Tax Relief Owe the IRS $10,000? What to Expect and 7 Ways to Repay in 2025 Updated Apr 18, 2025 6-min read Expert Approved Expert Approved This article has been reviewed by a Certified Financial Planner™ for accuracy. Written by Aly Yale Written by Aly Yale Expertise: Home equity, mortgages, real estate Aly Yale is a freelance writer with more than a decade of experience covering real estate and personal finance topics. Learn more about Aly Yale Reviewed by Gail Urban, CFP® Reviewed by Gail Urban, CFP® Expertise: Investment management, financial planning, financial analysis, estate planning, life insurance, student loan management, debt management, retirement planning, saving for college Gail Urban, CFP®, AAMS®, has been a licensed financial advisor since 2009, specializing in helping individuals. Before personal financial advising, she worked as a business financial manager in several industries for about 25 years. Learn more about Gail Urban, CFP® It’s not a good feeling to check your tax balance and find out you owe the IRS at least $10,000 in unpaid taxes. But it’s never too late to take action. You should even be able to settle your debt with the IRS by yourself at this range of back tax. The IRS offers ways to both lower your tax burden, as well as spread your repayment out into manageable payments over time. Since you owe less than $50,000, you’re eligible for either a short-term or long-term installment plan, which allows you to spread your payments out over 72 months (six years). An Offer in Compromise—which lets you settle your debt for less than you owe—may also be an option, though these are more difficult to come by than installment agreements. Table of Contents What happens if I owe $10,000 or more? Penalties and interest Wage garnishment, asset seizure Statute of limitations 7 ways to repay 1. Short-term installment agreement 2. Long-term Installment agreement 3. Partial payment installment agreement 4. Offer in Compromise (OIC) 5. File Currently Not Collectible (CNC) Status 6. Work with a tax relief service 7. Scrape together 10K to pay it off in full What happens if I owe $10,000? If you owe 10K or more to the IRS, it will start by charging late penalties (as well as failure to file penalties, if applicable), and interest will begin to accrue as well. The IRS may also issue tax liens against your property. These are legal claims against your home, car, and other assets, indicating the IRS may seize them to repay your debts. Penalties and interest If you owe the IRS over $10,000, you’ll face penalties and interest. The failure-to-pay penalty is 0.5% of the unpaid taxes per month, up to 25%. Interest is the federal short-term rate plus 3%, compounding daily. Wage garnishment, asset seizure Yes, the IRS can garnish wages or seize assets if you owe more than $10,000 and don’t arrange to pay. It will send notices before taking action. Statute of limitations There’s a 10-year statute of limitations on IRS debt collection from the date the tax was assessed, after which the IRS can’t collect the debt. What if I owe the IRS more than $10,000? Owing more than $10,000 can feel overwhelming, but you still have multiple paths to resolve your tax debt without legal trouble—especially if you act fast. As long as your total IRS debt is under $50,000, you’re generally eligible for all the options we’ll cover in detail below. What’s important is that you engage with the IRS before they escalate collections. Liens, wage garnishment, and levies are possible—but avoidable—if you take steps to resolve the debt. Owe more than $50,000? We’ve got you covered in this guide: So You Owe the IRS $25,000, $50,000, or More? What Happens Next. 7 ways to repay 1. Short-term installment agreement Next step: Apply directly via the IRS Online Payment Agreement tool or file Form 9465. How it works: Pay debt within 120 days. If you can repay your tax debt in full within four months, this is your simplest option. A short-term installment agreement lets you avoid setup fees and doesn’t require as much paperwork. You’ll still owe interest and late payment penalties until the balance is paid off, but it’s a fast, straightforward way to stop the IRS from escalating collection efforts. 2. Long-term Installment agreement Next step: Apply directly via the IRS Online Payment Agreement tool or file Form 9465. How it works: Pay debt within 72 months. If 120 days isn’t enough, you can apply for a long-term installment plan — also called an IRS payment plan. These let you spread out your payments for up to six years. Fees apply (especially if you pay by check or mail), but automatic withdrawals come with lower setup costs. As long as you stick to your payment schedule, the IRS won’t take further collection action. 3. Partial payment installment agreement Next step: Fill out Form 9465 & Form 433-F; Alternatively, fill out Form 433-A if self-employed or Form 433-B if paying off business tax. How it works: Make smaller monthly payments using all your assets first; requires regular financial reviews. If you can’t afford the full payments a short- or long-term installment agreement allows, a Partial Payment Installment Agreement (PPIA) is a good bet. PPIAs let you make smaller monthly payments. However, the IRS could require higher ones later on if your financial situation changes. It conducts financial reviews every two years. 4. Offer in Compromise (OIC) Next step: Fill out Form 656 Booklet, including Form 433-A (OIC) if you’re an individual or Form 433-B (OIC) for businesses. How it works: Make IRS an offer for less than you owe; pay debt in 24 months. With OICs, you make the IRS an offer based on your assets, income, expenses, and overall ability to pay. If the agency accepts, you can spread the payment out over 24 months, maximum. 5. File Currently Not Collectible (CNC) Status Next step: Fill out Form 433-F (Collection Information Statement) or Form 433-A if you’re self-employed How it works: Prove you’re financially unable to repay your debts and cover your basic living expenses at the same time. If you’re facing financial hardship, you can file for Currently Not Collectible status. Qualifying for CNC status essentially puts all IRS collections on hold — including any liens, levies, or wage garnishments that might come with it. 6. Work with a tax relief service Next step: Compare the best tax relief companies How it works: Tax professionals review your situation and negotiate with the IRS on your behalf. No matter how much you owe in back taxes, you can always work with the IRS directly. Most required forms are easily accessible on the agency’s website, and you may even be able to file for some relief options entirely online. If that feels uncomfortable or the process too overwhelming, you can also seek help from an experienced tax professional. Be careful, though: The Federal Trade Commission has reported numerous tax relief scams, so choose the tax expert you use wisely. 7. Scrape together 10K to pay it off in full Next step: Explore options like a personal loan, home equity loan, or line of credit. Then, pay in full using the IRS Direct Pay tool or your IRS online account. If you have savings, assets you can sell, or access to credit, paying your full balance upfront may be your best move. Doing so stops penalties and interest from piling up and gets the IRS off your back for good. You’ve got your plan in place. Now, how can you avoid owing the IRS more than $10,000 in the future? To avoid owing the IRS, adjust your withholdings, make estimated tax payments if needed, keep accurate records, and seek professional advice for complex tax situations.