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Tax Relief and Resolution: 5 Ways to Deal With Tax Debt
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do not influence our editors’ opinions or ratingsTax Relief and Resolution: 5 Ways to Deal With Tax Debt
If you're behind on taxes or finding it hard to keep up with your IRS payments, here are five tax relief options that could help.
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Editor & Content Strategist
Expertise Taxes InvestingSabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York.
Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York. Published in Editor & Content Strategist + more + more
Editor & Content Strategist
23 years of experience Expertise Taxes Small business Social Security and estate planning Home services RIATina Orem is an editor and content strategist at NerdWallet. Prior to becoming an editor and content strategist, she covered small business and taxes at NerdWallet. She has a degree in finance, as well as a master's degree in journalism and an MBA. Previously, she was a financial analyst and director of finance at public and private companies. Tina's work has appeared in a variety of local and national media outlets.
Tina Orem is an editor and content strategist at NerdWallet. Prior to becoming an editor and content strategist, she covered small business and taxes at NerdWallet. She has a degree in finance, as well as a master's degree in journalism and an MBA. Previously, she was a financial analyst and director of finance at public and private companies. Tina's work has appeared in a variety of local and national media outlets. Published in Editor & Content Strategist + more + moreIf you're behind on your taxes or struggling to cope with a tax bill, you might be wondering what options are available to you. Five common tax debt relief programs are available for people who need help with a federal tax bill, back taxes, a tax penalty and more.
If you're behind on your taxes or struggling to cope with a tax bill, you might be wondering what options are available to you. Five common tax debt relief programs are available for people who need help with a federal tax bill, back taxes, a tax penalty and more. IRS payment plan Offer in compromiseCurrently-not-collectible status
Currently-not-collectible status Penalty abatement Tax relief providers AD Owe $10,000+ or More? This Tax Season Could Be Your Chance to Qualify Each year the IRS writes off millions in tax debt, yet few have applied. Learn moreon Anthem Tax Services' website
AD Let’s resolve your tax issues: Tax Relief & Resolution Services for IRS Tax Debt Certified Enrolled Agents, CPAs, and Tax Attorneys on your case. Learn moreon TaxRise's website
What is tax debt relief?
What is tax debt relief?The term “tax relief” can refer to a number of things within the world of taxes. Broadly speaking, any measure or incentive that helps taxpayers legally reduce their tax bills can be considered tax relief in terms of policy. This can include popular breaks, such as tax credits, tax deductions and even stimulus checks or rebates.
The term “tax relief” can refer to a number of things within the world of taxes. Broadly speaking, any measure or incentive that helps taxpayers legally reduce their tax bills can be considered tax relief in terms of policy. This can include popular breaks, such as tax credits , tax deductions and even stimulus checks or rebates.Tax relief is also a phrase frequently used by the IRS to talk about certain tax deadline extensions for taxpayers who live in federally declared disaster areas or who were affected by certain events, such as hurricanes or floods
Tax relief is also a phrase frequently used by the IRS to talk about certain tax deadline extensions for taxpayers who live in federally declared disaster areas or who were affected by certain events, such as hurricanes or floodsIn the realm of tax trouble, tax relief takes on a different meaning. In this context, it refers to certain programs or policies that help taxpayers with delinquent or overdue tax bills manage, pay off, or even settle their tax debt or back taxes. Many tax debt relief programs below are part of the IRS’s Fresh Start program, which aims to streamline and ease the burden of debt collection and payoff for taxpayers.
In the realm of tax trouble, tax relief takes on a different meaning. In this context, it refers to certain programs or policies that help taxpayers with delinquent or overdue tax bills manage, pay off, or even settle their tax debt or back taxes . Many tax debt relief programs below are part of the IRS’s Fresh Start program, which aims to streamline and ease the burden of debt collection and payoff for taxpayers.» MORE: Need a tax extension? You might already have one
» MORE: » MORE: Need a tax extension? You might already have one5 tax relief options
5 tax relief options1. IRS payment or installment plans
1. IRS payment or installment plansIf you need more time to pay your tax bill, check to see if you qualify for an IRS payment plan. A payment plan will allow you to pay back your overdue tax bill (plus accrued interest and fees) over a period of time. The IRS offers two types of installment plans: short-term and long-term.
If you need more time to pay your tax bill, check to see if you qualify for an IRS payment plan . A payment plan will allow you to pay back your overdue tax bill (plus accrued interest and fees) over a period of time. The IRS offers two types of installment plans: short-term and long-term.Here are a few other things to know about getting tax relief via an IRS payment plan:
Here are a few other things to know about getting tax relief via an IRS payment plan:A payment plan doesn’t get you out of interest for late payment — that accrues until your balance is zero. But getting on a plan can reduce the failure-to-pay fee by half.
A payment plan doesn’t get you out of interest for late payment — that accrues until your balance is zero. But getting on a plan can reduce the failure-to-pay fee by half.If you owe more than $25,000, you have to make your payments via automatic withdrawals from a bank account.
If you owe more than $25,000, you have to make your payments via automatic withdrawals from a bank account.If you make your payments with a debit card, credit card or digital wallet, you'll have to pay a processing fee. The charge for debit cards runs from about $2 per payment; the charge for credit cards is about 2% of the payment.
If you make your payments with a debit card, credit card or digital wallet, you'll have to pay a processing fee. The charge for debit cards runs from about $2 per payment; the charge for credit cards is about 2% of the payment.Lower-income applicants may be able to get their setup fees waived.
Lower-income applicants may be able to get their setup fees waived.» Next steps: Learn more about IRS payment plans and how to set one up
» Next steps: » Next steps: Learn more about IRS payment plans and how to set one up2. Offer in compromise
2. Offer in compromiseAnother option for tax relief is available through what’s called an "offer in compromise." This lets you settle your back taxes with the IRS for less than you owe. According to the IRS, it may be an option if you absolutely can’t pay your tax debt or if doing so creates a financial hardship.
Another option for tax relief is available through what’s called an "offer in compromise." This lets you settle your back taxes with the IRS for less than you owe. According to the IRS, it may be an option if you absolutely can’t pay your tax debt or if doing so creates a financial hardship.But it's much harder to get the IRS to sign off on an offer in compromise than on a payment plan. The IRS typically accepts fewer than half the requests
But it's much harder to get the IRS to sign off on an offer in compromise than on a payment plan. The IRS typically accepts fewer than half the requests Internal Revenue Service. 2022 Internal Revenue Service Data Book. Accessed Jan 20, 2026. . You should explore other options before turning to an offer in compromise.To determine whether you qualify for tax relief via an offer in compromise, the IRS considers your ability to pay, your income and expenses, and how much you have in assets.
To determine whether you qualify for tax relief via an offer in compromise, the IRS considers your ability to pay, your income and expenses, and how much you have in assets.Here are a few things to know about getting tax relief via an offer in compromise:
Here are a few things to know about getting tax relief via an offer in compromise:There’s a $205 application fee and you'll need to make an initial payment — both of which are typically nonrefundable.
There’s a $205 application fee and you'll need to make an initial payment — both of which are typically nonrefundable.Low-income taxpayers might be able to get this application fee and initial payment waived.
Low-income taxpayers might be able to get this application fee and initial payment waived.You have to be current on all your tax returns. If you haven’t filed a tax return in a while, you may not qualify.
You have to be current on all your tax returns. If you haven’t filed a tax return in a while, you may not qualify.The IRS can file or keep tax liens in place until it accepts your offer and you’ve fulfilled your end of the deal.
The IRS can file or keep tax liens in place until it accepts your offer and you’ve fulfilled your end of the deal.You don’t qualify if you are in an open bankruptcy proceeding.
You don’t qualify if you are in an open bankruptcy proceeding.You can hire a qualified tax professional to help you do the paperwork, but it’s not required.
You can hire a qualified tax professional to help you do the paperwork, but it’s not required.Once you file your application, the IRS suspends collection activities
Once you file your application, the IRS suspends collection activities Internal Revenue Service. Form 656: Booklet Offer in Compromise. Accessed Jan 20, 2026. .» Next steps: Learn more about offers in compromise and who qualifies
» Next steps: » Next steps: Learn more about offers in compromise and who qualifies3. "Currently-not-collectible" status
3. "Currently-not-collectible" statusIf you can't pay your taxes and living expenses within reason, you can ask the IRS to put your account in what’s called "currently not-collectible" status. You need to request this delay in collection, and the IRS may ask you to complete a Collection Information Statement or a Collection Information Statement for Wage Earners and Self-Employed Individuals form to verify the state of your finances. You'll need to supply information about your monthly income and expenses on that form.
If you can't pay your taxes and living expenses within reason, you can ask the IRS to put your account in what’s called "currently not-collectible" status. You need to request this delay in collection, and the IRS may ask you to complete a Collection Information Statement or a Collection Information Statement for Wage Earners and Self-Employed Individuals form to verify the state of your finances. You'll need to supply information about your monthly income and expenses on that form.Here are some things to know about applying for CNC status:
Here are some things to know about applying for CNC status:It's temporary — the IRS may review your income annually to see if your financial situation has improved.
It's temporary — the IRS may review your income annually to see if your financial situation has improved.Being deemed "currently not collectible" doesn't make your tax debt go away.
Being deemed "currently not collectible" doesn't make your tax debt go away.The IRS can still file a tax lien against you.
The IRS can still file a tax lien against you. AD Owe $10,000+ or More? This Tax Season Could Be Your Chance to Qualify Each year the IRS writes off millions in tax debt, yet few have applied. Learn moreon Anthem Tax Services' website
AD Let’s resolve your tax issues: Tax Relief & Resolution Services for IRS Tax Debt Certified Enrolled Agents, CPAs, and Tax Attorneys on your case. Learn moreon TaxRise's website
4. Penalty abatement
4. Penalty abatementIf you have an otherwise clean record but get hit with an IRS penalty for failing to file or failing to pay, you may be able to request a reversal of the penalty and associated interest through what’s called a “first-time penalty abatement.” To qualify for this type of relief, you’ll typically have to meet certain criteria, including having filed tax returns for the last three years if you were required to and not having had any IRS penalties imposed during the past three years
If you have an otherwise clean record but get hit with an IRS penalty for failing to file or failing to pay, you may be able to request a reversal of the penalty and associated interest through what’s called a “first-time penalty abatement.” To qualify for this type of relief, you’ll typically have to meet certain criteria, including having filed tax returns for the last three years if you were required to and not having had any IRS penalties imposed during the past three years Internal Revenue Service. Penalty Relief due to First Time Abate or Other Administrative Waiver. Accessed Jan 20, 2026. .The IRS also offers penalty relief for reasonable cause, which can help if you were unable to timely file because of a certain life circumstance, such as a serious illness, family death, or a fire or another natural disaster
The IRS also offers penalty relief for reasonable cause, which can help if you were unable to timely file because of a certain life circumstance, such as a serious illness, family death, or a fire or another natural disaster Internal Revenue Service. Penalty Relief for Reasonable Cause. Accessed Jan 20, 2026. . To qualify, you'll need to provide evidence and documentation, such as a hospital or court record, to substantiate the event Internal Revenue Service. Penalty Relief for Reasonable Cause. Accessed Jan 20, 2026. .» Next steps: Learn more about first-time penalty abatement and who qualifies
» Next steps: » Next steps: Learn more about first-time penalty abatement and who qualifies5. Hiring a tax relief company
5. Hiring a tax relief companyTax relief companies typically offer to help taxpayers in distress. Some of them can be legitimately helpful if you’re confused about the process or need help filling out forms, but be wary of offers that seem too good to be true, such as promises to get money back or eliminate your debt entirely. The Federal Trade Commission encourages taxpayers with tax debt to first try to settle their situation directly with the IRS
Tax relief companies typically offer to help taxpayers in distress. Some of them can be legitimately helpful if you’re confused about the process or need help filling out forms, but be wary of offers that seem too good to be true, such as promises to get money back or eliminate your debt entirely. The Federal Trade Commission encourages taxpayers with tax debt to first try to settle their situation directly with the IRS Federal Trade Commission. Consumer Advice: Tax Relief Companies. Accessed Apr 18, 2024. . If you choose to work with a tax relief company, remember:The IRS rejects most applications for offers in compromise.
The IRS rejects most applications for offers in compromise.If a tax relief company loses or delays your application, you’re still responsible for your tax debt, interest, and penalties with the IRS.
If a tax relief company loses or delays your application, you’re still responsible for your tax debt, interest, and penalties with the IRS.You may have to pay an upfront fee to the tax relief company, and it may be a percentage of the tax you owe. That fee may be higher than what you end up saving on your tax bill if the IRS accepts your offer in compromise (and it might not be refundable if the IRS rejects your offer).
You may have to pay an upfront fee to the tax relief company, and it may be a percentage of the tax you owe. That fee may be higher than what you end up saving on your tax bill if the IRS accepts your offer in compromise (and it might not be refundable if the IRS rejects your offer).Some tax relief companies will charge you a fee to determine how much you owe the IRS, set up a payment plan or see if you qualify for an offer in compromise. But these are things you can often do yourself for free:
Some tax relief companies will charge you a fee to determine how much you owe the IRS, set up a payment plan or see if you qualify for an offer in compromise. But these are things you can often do yourself for free:Find out whether you have an outstanding balance with the IRS and how much it is. You can get that at IRS.gov/account.
Find out whether you have an outstanding balance with the IRS and how much it is. Find out whether you have an outstanding balance with the IRS and how much it is. You can get that at IRS.gov/account .Get your tax records. The IRS provides fivetypes of free tax transcripts that let you peek at its records on you. For example, you can see most line items from your tax returns processed during the last three years or get basic data such as your marital status, how you paid and your adjusted gross income for the current tax year and for up to the last 10 years. (Note that a tax transcript isn’t the same as a copy of your tax return.)
Get your tax records. Get your tax records. The IRS provides five types of free tax transcripts that let you peek at its records on you. For example, you can see most line items from your tax returns processed during the last three years or get basic data such as your marital status, how you paid and your adjusted gross income for the current tax year and for up to the last 10 years. (Note that a tax transcript isn’t the same as a copy of your tax return.)Set up a payment plan with the IRS, as described above.
Set up a payment plan with the IRS Set up a payment plan with the IRS , as described above.See if you qualify for an offer in compromise. The IRS's online offer in compromise pre-qualifier tool can help you determine whether the program might be for you. Remember, the tool is just the beginning of the journey — you'll still need to complete a formal application.
See if you qualify for an offer in compromise. See if you qualify for an offer in compromise. The IRS's online offer in compromise pre-qualifier tool can help you determine whether the program might be for you. Remember, the tool is just the beginning of the journey — you'll still need to complete a formal application.» MORE: How to make an IRS payment
» MORE: » MORE: How to make an IRS paymentHelpful resources
Helpful resources How Federal Tax Brackets and Rates Work Capital Gains Tax: Long and Short-Term Rates for 2025-2026 How to Fill Out Your W-4 Form and When to Adjust It More like this Taxes 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Get started Get startedon Larson Tax Relief's website
Tax Levies & Liens Release, plus Wage Garnishment Relief;
Tax Levies & Liens Release, plus Wage Garnishment Relief;End Penalties & Interest and Resolve Back Taxes;
End Penalties & Interest and Resolve Back Taxes;IRS Audit Defense, Tax Negotiation, and Payroll Tax Support.
IRS Audit Defense, Tax Negotiation, and Payroll Tax Support. Get started Get startedon Larson Tax Relief's website