Tax Debt – State & Federal

Oakland County Certified Public Accountants Serving Clients Nationwide

In their 2016 report, the IRS had accepted more offers in compromise than any previous year. 2016 marked the IRS' all-time high for offers in compromise, reaching an acceptance rate of 42.86%. The dollar amount of offers in compromise had also increased by 10.35% since the the previous year. Because of the ailing economy, Tax Resolve has taken on more clients who had tax collection matters.

Our clients come from a variety of situations; for example, some of them may have gone from having a high paying job with high earnings, to working at a much lower paying job after a layoff. As Oakland County Certified Public Accountants, it's our job to persuade the IRS to see that our client's situation has really changed for the worse and that they need relief.

The good news is that since the economic downturn began, the IRS has announced more flexible offer in compromise terms to help a greater number of struggling taxpayers resolve their tax debts and make a fresh start. It has actually been easier for people to reach agreements and pay their tax debts over time and in many ways, the IRS has relaxed its policy and is willing to work with people to get back in the system. 

What happens if I ignore my tax debt?

Ignoring a balance owed to the IRS or the State of Michigan doesn't make it go away — it allows penalties and interest to keep accruing, and can eventually lead to liens, levies, or wage garnishment. The sooner you address the debt, the more options you have for resolving it on favorable terms.

How much does an offer in compromise typically save?

Every case is different, but an accepted offer in compromise allows you to settle your tax debt for less than the full amount owed, based on your income, expenses, assets, and ability to pay. Our CPAs evaluate your financial picture to determine whether you're likely to qualify and what a realistic offer might look like.

Will an installment agreement stop IRS collection actions?

Once the IRS approves an installment agreement, active collection efforts like levies typically stop as long as you stay current on your payments. We help structure an agreement that fits your budget so you can stay in compliance without it causing additional financial strain.

What does it mean to be declared "currently not collectible"?

If your necessary living expenses exceed your income, the IRS may agree to temporarily pause collection activity. This status doesn't erase the debt, but it stops levies and garnishments while your financial hardship continues, giving you breathing room to get back on your feet.

Can my tax debt expire?

Generally, yes. The IRS has a 10-year statute of limitations to collect tax debt from the date it was assessed, though certain actions (like filing bankruptcy or submitting an offer in compromise) can pause or extend that clock. Understanding where you stand in that timeline is a key part of deciding which resolution strategy makes sense.

Do I need to resolve state and federal tax debt separately?

Yes — the IRS and the State of Michigan (or other states) handle collections independently, so a resolution with one doesn't automatically apply to the other. We routinely help clients address both state and federal tax debt matters, sometimes simultaneously, to reach a full resolution.

What financial documents will I need to provide?

Most resolution options require a detailed look at your finances — recent pay stubs, bank statements, monthly expenses, asset information, and prior tax returns. We'll walk you through exactly what's needed and help you compile it so the IRS or state agency has a complete, accurate picture of your situation.

Can a business resolve its tax debt the same way an individual can?

Businesses have access to similar tools, including installment agreements and offers in compromise, but the process often involves additional considerations like payroll tax liabilities and trust fund recovery penalties. We work with both individual and business clients to find the right path forward.

What if my financial situation changes after I set up a payment plan?

If your income or expenses change significantly, it's often possible to renegotiate your installment agreement or pursue a different resolution option, such as currently-not-collectible status. We recommend reaching out as soon as your circumstances shift so we can adjust your strategy before you fall out of compliance.

How long does it take to resolve tax debt?

Timelines vary depending on the complexity of your case and which resolution option applies — some installment agreements can be set up quickly, while an offer in compromise can take several months for the IRS to review. During your free case evaluation, we'll give you a realistic sense of what to expect for your specific situation.

You Can Resolve Your Tax Debts! We Can Help.

Whatever you choose to do will depend on your unique situation, how much you owe and how much time remains on that statute of limitations for your tax liability.