If you owe the IRS more than you can pay right now, you have options. The IRS has formal programs designed for exactly this situation, and an Enrolled Agent can request and negotiate these arrangements on your behalf.

The most common path is an installment agreement. This lets you pay your tax debt over time in monthly payments. For balances under $50,000, the IRS has a streamlined process that doesn’t require detailed financial disclosure. You apply, propose a monthly amount, and if the IRS accepts, you make payments until the balance is paid off. Interest and penalties continue to accrue on the unpaid balance, but you avoid more aggressive collection actions like wage garnishment or bank levies.

For larger amounts or if you can’t afford the monthly payments under a standard agreement, you’ll need to provide detailed financial information. Your income, expenses, and assets all factor into what the IRS determines you can reasonably pay each month. Having clean records from your small business bookkeeping makes this documentation process much smoother.

In cases of genuine financial hardship, an offer in compromise may let you settle for less than you owe. This is not a shortcut or loophole. The IRS only accepts an OIC when they believe collecting the full amount isn’t realistic given your financial situation. You’ll need to document your income, expenses, assets, and future earning potential. Most offers get rejected, so this path isn’t for everyone. But for those who genuinely can’t pay and won’t be able to in the foreseeable future, it can provide real relief.

If you’re in temporary hardship and can’t pay anything right now, the IRS may place your account in “currently not collectible” status. This pauses active collection while your situation stabilizes. It doesn’t erase what you owe, and penalties and interest keep adding up, but it gives you breathing room.

The worst thing you can do is ignore the problem. Penalties and interest compound over time, and the IRS has significant collection powers. Engaging early gives you more options.

Simona Leppala is a CPA and Enrolled Agent, which means she can represent you directly before the IRS. Through our IRS representation services, she can review your specific situation, determine which relief option fits best, submit the appropriate request, and handle all communication with the IRS on your behalf. Every case depends on your particular numbers and circumstances, so what works for one person may not be right for another.

If you’re carrying a tax debt you can’t pay in full, reach out for a consultation. We’ll look at the specifics and figure out the best path forward.