Sometimes, paying taxes on time in full is just not possible.
If you owe more taxes than you can pay, you still want to file because the IRS will work with you.
For example, you can enter a payment agreement with the IRS (like a monthly payment plan or offer in compromise) and you might even be eligible for a penalty waiver.
Apply for a payment plan to repay your back taxes in installments over several months.
If a payment plan is approved, the IRS is generally prohibited, with certain exceptions, from continuing to garnish your wages.
The levy will stay lifted as long as you stay on track with the new agreement.
Currently not Collectible
For taxpayers struggling to make payments, requesting a currently not collectible (CNC) status from the IRS may grant you some time.
If the IRS grants your request for CNC status, they will temporarily suspend the wage garnishment (and other collections actions).
It’s important to be aware that your unpaid balance does not disappear – this only provides temporary tax relief.
When your financial situation improves, the clock starts again, and IRS collections can begin anew.
While this method can offer temporary relief during difficult times, the amount you owe will continue to grow due to penalties and interest.
Offer in Compromise
Another option is to apply for an offer in compromise (OIC), which you may know more commonly as a settlement.
Not everyone is eligible for an offer in compromise. To see if you qualify, the IRS will assess information about your income, assets, and expenses.
You must explore all other payment options before submitting an offer in compromise.