Frequently Asked Questions

What is the IRS Fresh Start Program?

The IRS Fresh Start Initiative is a collection of policy changes introduced in 2011 that make it easier for individual taxpayers and small businesses to resolve tax debt. It expanded four key areas: installment agreements (threshold raised to $50,000, terms extended to 72 months), offers in compromise (more flexible eligibility), penalty abatement, and federal tax lien thresholds (raised to $10,000). There is no single application — it refers to expanded access to existing programs.

How do I know if I qualify for an Offer in Compromise?

The IRS accepts an Offer in Compromise when the amount you offer represents the most they can reasonably expect to collect from you — called your Reasonable Collection Potential (RCP). RCP equals the net realizable value of your assets plus a multiple of your monthly disposable income (12x for lump sum offers). If your RCP is lower than what you owe, you may qualify. You must also be in full filing compliance and not in an open bankruptcy.

How long does an IRS payment plan last?

For balances under $50,000, the IRS allows up to 72 months (6 years) under a Streamlined Installment Agreement — expanded from 60 months under Fresh Start. For balances under $10,000, you can qualify for a Guaranteed Installment Agreement requiring payment within 3 years. For larger balances requiring full financial disclosure, the term depends on the amount owed and your demonstrated ability to pay.

What is the difference between a tax lien and a tax levy?

A tax lien is a legal claim the IRS files against all of your property — it does not take anything from you, but it creates a public record that affects your ability to sell or refinance property. A tax levy is the actual seizure of your property — bank accounts, wages, real estate. A lien often comes first; a levy follows if the debt remains unresolved after the full notice sequence is completed.

Can the IRS garnish my Social Security?

Yes. Under the Federal Payment Levy Program, the IRS can garnish up to 15% of your Social Security benefits (including retirement, disability, and survivor benefits) for federal tax debt. Social Security Supplemental Security Income (SSI) is exempt from levy. The IRS must send a Final Notice of Intent to Levy at least 30 days before levying Social Security benefits.

What is Currently Not Collectible status?

Currently Not Collectible (CNC) is a formal IRS designation applied to accounts where attempting to collect the debt would create genuine financial hardship. The IRS compares your monthly income to your allowable expenses using IRS Collection Financial Standards. If your income minus allowable expenses is zero or negative, you may qualify. While in CNC, all collection activity stops — but interest and penalties continue to accrue, and the IRS reviews the account annually.

How long does the IRS have to collect my tax debt?

The IRS generally has 10 years from the date of assessment to collect a tax debt — this is called the Collection Statute Expiration Date (CSED). After that date, the debt is legally extinguished. Certain events pause the collection statute, including submitting an Offer in Compromise, filing for bankruptcy, and requesting a Collection Due Process Hearing. Each tax year has its own CSED.

What is First-Time Penalty Abatement?

First-Time Penalty Abatement (FTA) is an IRS administrative waiver that removes failure-to-file, failure-to-pay, or failure-to-deposit penalties for taxpayers with a clean compliance history — no significant penalties in the prior 3 tax years. You must also have filed all required returns and paid or arranged to pay any outstanding balance. FTA can be requested through a qualified tax professional on your behalf.

What happens if I ignore IRS notices?

Ignoring IRS notices does not make the debt go away — it accelerates the collection process. The IRS sends escalating notices (CP14, CP501, CP502, CP503, CP504, LT11). Once LT11 is sent and the 30-day window passes without a response, the IRS has full authority to levy wages, bank accounts, and other assets without further notice. Interest and penalties also continue to accrue throughout this process.

Can I go to jail for not paying my taxes?

Not paying taxes alone is almost never criminally prosecuted. However, willful failure to file tax returns is a federal misdemeanor under 26 U.S.C. § 7203, and tax evasion (actively hiding income or assets) is a federal felony under 26 U.S.C. § 7201. The IRS prioritizes civil collection over criminal prosecution for the vast majority of delinquent taxpayers.

Can the IRS take my house?

Yes — but it is extremely rare and requires multiple levels of supervisory and legal approval. The IRS almost always pursues bank levies, wage garnishments, and lien filings long before it reaches the point of seizing a primary residence. Property seizure becomes a consideration only after all other collection methods have been exhausted and the balance is large with significant equity in the home.

What is Innocent Spouse Relief?

Innocent Spouse Relief can protect you from liability for taxes resulting from errors or fraud on a joint tax return attributable to your spouse or former spouse. There are three types: Classic Innocent Spouse Relief, Separation of Liability Relief (for divorced or separated taxpayers), and Equitable Relief. File Form 8857 to apply.

Does setting up a payment plan stop IRS collection actions?

Yes. Once an installment agreement is approved by the IRS, levy action including wage garnishments and bank freezes must stop. However, a Notice of Federal Tax Lien may still be filed on balances over $10,000. Missing even one payment can default the agreement and restart collection activity.

What is a Revenue Officer and why were they assigned to my case?

An IRS Revenue Officer is a field agent assigned to enforce collection on specific accounts. Revenue Officers are assigned when the balance is large, there are multiple years of unfiled returns, there are unpaid business payroll taxes, or previous collection efforts have failed. Once you provide a Power of Attorney, the Revenue Officer must deal with your representative, not you directly.

Do You Qualify for Fresh Start Relief?

Use our free eligibility guide to find out which IRS program may apply to your situation. No personal information required.

No personal information required. 100% free.