Do You Owe the IRS More Than $10,000? Here Are Your Options

Failing to pay your taxes can come with significant consequences — threatening your paychecks, home, car, and assets, and adding additional fees and penalties to your balance. Of course, these repercussions vary based on how much you owe, as do your options for remedying them.

Do you owe over $10,000 in taxes? Over $50,000? Here’s what you need to know — and how to fix it.

Scenario one: I owe the IRS over $10,000 but less than $50,000

If you owe the IRS at least $10,000 in unpaid taxes, then you can expect a variety of penalties. Fortunately, it’s not too late to take action. The IRS offers ways to both lower your tax burden, as well as spread your repayment out over time (as much as six years!)

What can the IRS do to those in this range?

A $10,000 to $50,000 tax debt is no small number, and the IRS takes these sorts of unpaid balances seriously. 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 agency 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.

What are your repayment options?

If 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.

Option	Details	Forms
Short-term installment  agreement	Pay debt within 120 days	Form 9465 or apply online
Long-term installment agreement	Pay debt within 72 months	Form 9465 or apply online
Partial payment installment agreement	Make smaller monthly payments using all your assets first; requires regular financial reviews	Form 9465, Form 433-F
Offer in Compromise	Make IRS an offer for less than you owe; pay debt in 24 months	Form 656 Booklet

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Scenario two: I owe the IRS over $50,000

Even if you owe more than $50,000 in overdue taxes, there are still ways to get current, repay those debts, and avoid additional penalties. You may even be able to settle for less than you owe.

What can the IRS do to those in this range?

If you have more than $50,000 in debt, you can face all the previous consequences noted above — late penalties, added interest, and tax liens against your property.

The IRS might also start to cash in on those liens, too. That might mean seizing your home or car to pay off the debts owed or even garnishing your wages — taking a portion of each paycheck and putting it toward your balance. In some cases, the agency can also have your passport revoked, preventing you from traveling outside the U.S.

What are your repayment options?

You’ll have the same options with higher tax debt, but the way you’ll apply for those will be different. With installment agreements, you won’t be able to use the online application tool. You’ll also need to fill out an additional form, further detailing your financial situation.

Option	Details	Forms
Short-term installment  agreement	Pay debt within 120 days	Form 9465, Form 433-F (cannot apply online)
Long-term installment agreement	Pay debt within 72 months	Form 9465, Form 433-F (cannot apply online)
Partial payment installment agreement	Make smaller monthly payments using all your assets first; requires regular financial reviews	Form 9465, Form 433-F
Offer in Compromise	Make IRS an offer for less than you owe; pay debt in 24 months	Form 656 Booklet

What if you can’t afford to make payment?

If you can’t afford the full payments a short- or long-term installment agreement allows, a Partial Payment Installment Agreement (PPIA) or an Offer in Compromise (OIC) is your best 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.

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.

Finally, if you’re facing financial hardship, you can also 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. To be eligible, you’ll need to prove you’re financially unable to repay your debts and cover your basic living expenses at the same time.

Should I hire a tax relief firm?

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. Check reviews, make sure to speak to a representative, and compare tax relief companies to get started.

Recap of your tax relief options

Owing a large tax debt can be stressful, but fortunately, there are several solutions to choose from—no matter how big your balance may be.

Tax debt	Consequences	Resolutions
$10,000 to $50,000	Late fees, interest, tax liens	Short-term and long-term installment plans, partial payment installment plan, Offer in Compromise
$50,000 and up	Late fees, interest, tax liens, tax levies, wage garnishment, passport revocation	Short-term and long-term installment plans, partial payment installment plan, Offer in Compromise

FAQ

Are there penalties and interest if I owe the IRS more than $10,000, and what are the rates?

Yes, 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.

Can the IRS garnish my wages or seize my assets if I owe more than $10,000?

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.

How can I 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.

Is there a statute of limitations on IRS debt over $10,000?

Yes, 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.

How can I check the exact amount I owe to the IRS?

Check your IRS debt by using the IRS’s online account tool, calling it, using the IRS2Go app, or requesting a mail transcript of your account.