Tax Debt and Back Taxes: How to Get Real Help and Make a Plan

If you owe tax debt or have unfiled “back taxes,” the IRS and your state tax agency have specific processes to help you fix it, but you must contact them and respond to notices on time or the problem usually gets more expensive.

The two main official systems you will deal with are the Internal Revenue Service (IRS) for federal taxes and your state department of revenue or taxation for state income or business taxes; you typically have to resolve each separately.

Quick summary: How tax debt help usually works

  • You almost always need to file all missing tax returns first, even if you cannot pay.
  • The main official relief tools are payment plans, temporary collection pauses, and sometimes settlements (offers in compromise).
  • Your first concrete action today can be to create or log in to your IRS online account to see balances, deadlines, and notices.
  • After you contact the IRS or state agency, you typically get a written response approving, denying, or modifying your request.
  • Interest and penalties usually keep running until a plan is in place and you are current.
  • Rules and options can vary by state and by your specific situation, so you should verify details with your own tax agency.
  • Be cautious of scams: only work with .gov sites and licensed or nonprofit tax professionals.

Key terms to know

Key terms to know:

  • Back taxes — Federal or state taxes that were not paid in full by the original due date, often combined with missing or late-filed returns.
  • Tax lien — A legal claim a tax agency places against your property because of unpaid tax debt; it can affect your credit and ability to sell or refinance.
  • Installment agreement — A formal payment plan with the IRS or state where you pay your tax debt over time in set monthly amounts.
  • Offer in Compromise (OIC) — A settlement program where the IRS may accept less than the full amount owed if you meet strict financial hardship criteria.

Where to go officially when you owe back taxes

For federal tax debt, the official system is the IRS. You can typically:

  • Use your IRS online account to view balances, payment history, and some notices.
  • Call the IRS customer service number listed on the official IRS.gov site for individual or business accounts.
  • Receive and respond to IRS letters or notices, which usually list a notice number and the phone or mail contact to use.

For state tax debt, search for your state’s official department of revenue (or taxation) portal and confirm it ends in .gov. Common names include:

  • “Department of Revenue”
  • “Department of Taxation” or “Tax Commission”
  • “Franchise Tax Board” (for certain states)

Your first concrete action today can be: log in or create an IRS online account and check your exact balance, years owed, and any active notices. This tells you whether your account is already in collections, if a levy or lien is pending, and which years need returns.

After you log in or call:

  • You can usually set up a basic installment agreement online if you owe under certain limits and are current with your filing.
  • If your case is more complex (large balance, unfiled years, or enforced collection like garnishment), you’ll typically be told to call a specific IRS collections number or send in financial forms.

What to prepare before you contact the IRS or state

The more organized you are, the faster you can get to a payment plan or other relief; both the IRS and state agencies typically ask for proof of what you earn, what you own, and what you owe.

Documents you’ll typically need:

  • Recent pay stubs or proof of income (including self-employment records like 1099s, invoices, or profit-and-loss summaries).
  • Most recent filed tax returns and any IRS/state notices or letters you’ve received (these show notice numbers, deadlines, and contact lines).
  • Bank statements (often the last 3 months) to support your income/expense information when requesting hardship status or an Offer in Compromise.

If you have unfiled returns:

  • Gather W‑2s, 1099s, prior-year records, and basic expense information for each missing year.
  • If you lost forms, you can typically request a wage and income transcript through your IRS online account or by mail, which shows what employers and payers reported.

For larger debts or settlement/hardship requests, the IRS commonly requires financial disclosure forms (for example, forms that list your income, expenses, assets, and debts); state agencies often have similar financial worksheet forms on their official portals.

Step-by-step: How to start resolving tax debt

1. Confirm what you actually owe and what’s missing

  1. Create or log in to your IRS online account and note: total balance, years owed, and whether any years show as “not filed.”
  2. For state taxes, search for your state’s official tax portal, create an account if available, and check balances and filing history.
  3. Pull together all IRS and state notices you’ve received; sort by date and notice number so you can reference them on calls.

What to expect next: You’ll have a clear list of problem years and amounts, which lets you decide whether your first move is filing missing returns, requesting a payment plan, or asking for hardship status.

2. File all missing returns (even if you cannot pay)

  1. Prioritize unfiled returns, starting with the oldest year the IRS or state is asking for; use wage and income transcripts if you’re missing forms.
  2. If you can’t prepare them alone, contact a local IRS Volunteer Income Tax Assistance (VITA) site for low- to moderate-income help, or a licensed tax professional.
  3. File the returns electronically if allowed, or by mail to the address listed for that tax year and form.

What to expect next: Once returns are processed, your actual tax debt is updated; in some cases, filing can reduce an IRS “substitute for return” assessment. However, interest and penalties normally continue until the debt is paid or settled.

3. Request a payment plan (installment agreement)

  1. If your total federal balance meets IRS limits, use the IRS “payment plan/online installment agreement” tool in your online account.
  2. Enter your proposed monthly payment; choose an amount that fits your real budget, since missing payments can default the plan.
  3. For state taxes, check your state’s portal or call the number on your notice to ask how to apply for an installment agreement.

What to expect next:

  • You will typically receive a written notice saying your installment agreement is approved, modified, or denied.
  • If approved, the notice explains monthly due dates, payment methods, and penalties for missing a payment.
  • In some cases, federal or state agencies may still file a tax lien even while you are on a plan.

Optional phone script:
“I’m calling about a tax balance I can’t pay in full. I’d like to discuss setting up a monthly installment agreement. I have my notice number and recent income information ready.”

4. Consider hardship or settlement only if you truly cannot pay

If your income and assets are too low to handle a reasonable payment plan, the IRS and some states have hardship or settlement options.

Common federal options include:

  • Currently Not Collectible (CNC) status — Collection is temporarily paused because paying would prevent you from covering basic living expenses; interest typically still accrues.
  • Offer in Compromise (OIC) — A formal offer to settle for less than the full amount, requiring detailed financial disclosure and usually an application fee and initial payment unless you qualify for a low-income exception.

Steps:

  1. Call the IRS using the collections or notice number and ask what options may apply based on your income and assets.
  2. Download or request the financial information forms they require and fill them out carefully using your pay stubs and bank statements.
  3. Submit the full packet by mail or as instructed.

What to expect next: These reviews can take months, and you may be asked for additional documents. During review, enforced collection may be limited, but is not always fully stopped, depending on the program and your case.

Real-world friction to watch for

Real-world friction to watch for

A common barrier is that people ignore or misplace IRS and state notices, then call only after a levy, wage garnishment, or lien hits; at that point, the agency often requires more financial documents and stricter review before changing or stopping collection. If this happens, you typically need to contact the IRS or state revenue office right away, request to discuss a payment plan or hardship, and be ready to send income and expense proof quickly to minimize further enforcement.

Legitimate help options and scam warnings

Because tax debt involves money and personal information, stay strictly with official or regulated help sources.

Legitimate help options typically include:

  • IRS Taxpayer Assistance Centers (TACs): In-person offices where you can get information, set up payment arrangements, or get transcripts; you generally must call ahead for an appointment using the number listed on IRS.gov.
  • State department of revenue customer service lines: Use the phone number from your state’s .gov tax portal or your notice to ask about payment plans, penalty relief, or hardship programs.
  • IRS VITA/TCE programs: Volunteer programs that provide free tax return preparation for eligible low- and moderate-income taxpayers and seniors.
  • Licensed tax professionals: Certified public accountants (CPAs), enrolled agents (EAs), and tax attorneys are regulated and can represent you before the IRS and many state agencies.

Watch for these red flags:

  • Companies that guarantee they can wipe out your tax debt or get you an Offer in Compromise before reviewing your finances.
  • Requests to send money or personal data to websites or email addresses that do not end in .gov when claiming to be the IRS or state.
  • High-pressure sales calls promising “new government programs” or “special amnesty” if you pay a fee today.

Your next solid step, after checking your balances online, can be to call the official IRS or state tax number on your most recent notice, with your documents in front of you, and say you want to discuss payment options or hardship based on your current finances; from there, the agency will tell you exactly which forms and proofs they need and how to submit them.