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When You Owe

You Owe the IRS and Can't Pay. Here Are Your Real Options.

Owing more than you can pay is one of the most common tax situations there is, and the IRS has built in ways to handle it. Doing nothing is the only choice that reliably makes it worse.

The short version. Being unable to pay is not a crime and not a dead end. The IRS has formal programs for exactly this: pay over time, pause collection, or settle for less. The worst move is silence, because silence is what leads to liens and levies. Pick the path that fits your situation and the pressure usually stops.

Why doing nothing is the costly choice

While you wait, the failure to pay penalty and interest keep building, and the IRS works through a set sequence of notices that ends in the power to levy your wages and bank accounts. Engaging early, even just to set up a small monthly payment, stops that sequence.

Your options, by situation

Each of these is something you request and the IRS reviews. None is guaranteed, but one of them fits almost every situation.

  • Pay over timeIf you can clear the balance gradually, a monthly installment agreement is the most common fix.
  • Pause collectionIf paying anything would cause hardship, the IRS can mark your account Currently Not Collectible.
  • Settle for lessIf full payment is not realistic, an offer in compromise can settle the debt for less than you owe.
  • Cut the penaltiesIf penalties swelled the balance, some may be removable.

Not sure which option fits?

The right path depends on your numbers. Send your case in for a free review and we will tell you which one you likely qualify for.

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Related IRS notices

Installment AgreementPay the balance over time.Currently Not CollectiblePause collection during hardship.Offer in CompromiseSettle for less than the full amount.Penalty AbatementReduce the penalty portion of the balance.

Not your notice? Look yours up on the home page.

The legal basis

What this is grounded in

  • Installment agreements: Internal Revenue Code section 6159.
  • Offer in compromise: Internal Revenue Code section 7122. See the IRS Offer in Compromise page.
  • Failure to pay penalty: Internal Revenue Code section 6651. Interest: section 6601.
  • Currently Not Collectible is an administrative status the IRS uses when collection would create hardship.

These are the controlling Internal Revenue Code sections and Internal Revenue Manual parts. Links go to the live IRS.gov pages so you can confirm every point yourself.

Free review

Want Someone to Look at It First?

Send the short version of what you owe and what you can manage. We will tell you which option likely fits and whether to handle it yourself or hand it to a professional.

Educational review only. We do not promise any outcome, and submitting this form does not create a professional relationship.

We reply within one business day. Free and no obligation. We never sell your information.

Got it. Your case is in. We will review what you sent and get back to you by email with straight answers and the next step.

Not sure where to start? Get a free, no obligation review of your situation.

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