Consequences & Options of Unpaid Taxes

Do You Owe the IRS Between $10,000 and $49,999?

Look at Consequences and Resolution Options for IRS Back Taxes

If you owe over $10,000 in back taxes, the IRS will assess penalties and issue a tax lien. The agency may also try to involuntarily collect the tax debt. However, as long as you owe less than $50,000, it’s fairly easy to set up payments to protect yourself against unwanted collection actions — there are also other relief options available for struggling taxpayers. 

Key takeaways

• Owe over $10,000 – risk of tax liens, bank account seizure, and wage garnishment.
• Owe less than $50,000 – can set up monthly payments on tax debt with no financial disclosure if meet other criteria.
• Owe between $25k and $50k – must set up direct debits to qualify for installment agreement without providing a financial disclosure.

To help you out, we explain what you need to know if you owe between $10,000 and $49,999 in unpaid federal taxes. Want help now? Then, don’t wait. Contact us at the W Tax Group today.

Consequences If I Owe Over $10,000 in Taxes

The IRS typically issues federal tax liens against taxpayers who owe over $10,000 in tax debt. Tax liens attach to all of your assets, and they are the precursor to tax levies. A tax levy is when the IRS seizes your assets. Most commonly, the agency garnishes your wages or seizes the money in your bank account. But sometimes, the IRS can also seize your personal or real property or even your home. 

However, if you owe $50,000 or less, you can avoid tax liens and other collection actions by proactively setting up a payment plan before the IRS starts the collection process. There is more info on payment options below.

Will I lose my passport if I owe over $10,000 to the IRS?

No, the IRS will only tell the State Department to revoke your passport if your tax debt is “seriously delinquent” – as of 2025, that means you owe $65,000 or more. However, even at that level of debt, you can keep your passport if you just set up payments before the IRS starts collections.

Can I get a tax refund if I owe over $10,000?

No, if you owe tax debt, the IRS will seize your tax refund and apply it to your debt. This happens through the Treasury Offset Program. This program also requires your state to send state refunds to the IRS if you have unpaid taxes. 

Even if you owe less than $10k, the IRS will still take your refund. This rule applies to anyone who owes any amount of unpaid state or local taxes. 

What if my business owes over $10,000 in taxes?

At this level of tax debt, your business may face tax liens and levies. However, if you owe less than $25,000 and can afford to pay off the tax debt in 24 months, you will probably qualify for a payment plan. 

You can get business payment plans on larger amounts of tax debts with longer repayment terms, but to qualify, you may need to be a sole proprietor, no longer operating, or meet other criteria.

What If I Owe $20,000, $25,000, or $30,000 in Tax Debt?

The consequences and options for all of these levels of tax debt are roughly the same. If you owe less than $50,000 and can afford to pay off the balance within 72 months, you can generally set up a payment plan online without jumping through too many hoops. However, if you don’t take action, you risk facing tax liens, wage garnishments, bank account seizure, and asset levies. 

That said, the exact resolution options can vary based on your situation. For instance, if you cannot pay off the tax debt within 72 months, you may qualify for a longer-term or smaller payments. If you do not have any disposable income or equity in your assets, you may qualify for a settlement. If the tax debt is due to your spouse and you meet certain other criteria, you may qualify for innocent spouse relief. The following section outlines the main options.

IRS Payment Options for $10,000 to $50,000 in Tax Debt

The IRS is often willing to let you make payments on your tax debt, and if you set up payments before the agency issues a tax lien, they usually won’t file one if you owe less than $50,000. However, the application process and options vary based on how much you owe. Here is an overview of the options for people who owe more than $10,000 and less than $50,000.

180-Day Payment Plan

If you can afford to pay off your tax liability within 180 days or less of the filing deadline, you don’t need to apply for a payment plan. You can go online and set up a short-term payment plan. The IRS allows you to use this option if you owe up to $100,000, but not if you owe more than $100,000.

Guaranteed Installment Agreement

If you owe exactly $10,000 or less, you can qualify for a guaranteed installment agreement. Your payment plan will be automatically accepted if the following statements are true:

• You and your spouse have filed all returns on time for the last five years.
• You and your spouse haven’t entered into an installment agreement for unpaid taxes in the last five years. 
• You can pay off the full amount of your tax debt in three years or less. 
• You agree to stay compliant with tax laws during the term of the installment agreement. 

If you owe over $10k, you can make a payment to get your balance below this threshold and then apply for a guaranteed installment agreement. Or if a significant part of your balance due is penalties, you may be able to get under the limit by requesting penalty abatement.

Streamlined Installment Agreement

If you owe less than $50,000, you can set up a streamlined installment agreement. A streamlined agreement means that the IRS will accept your payment plan request without requiring you to submit any financial details. You also must meet the following criteria:

• Able to pay off the balance within 72 months (or by the collection expiration date if sooner).
• Haven’t defaulted on a payment plan in the last two years.
• Don’t have any outstanding tax returns.

You can apply online, over the phone, or through the mail if you owe less than $50.000. In contrast, if you owe over $50,000, you must apply over the phone or on paper using Form 9465 (Installment Agreement Request). Additionally, when you owe over $50,000, you have to provide detailed financial information or the IRS won’t approve your request for a payment plan. 

What if I owe less than $50k but need more than six years to pay?

The IRS may be willing to let you make payments up to the collection expiration date, which is approximately 10 years after the return was filed. However, you will need to complete a collection information statement to prove you’re paying the most you can afford.

What if I can’t afford the minimum monthly payments on an installment agreement?

You may be able to get a plan with lower monthly payments, but again, you will need to complete a collection information statement which gathers details about your income, assets, debts, and expenses. 

Depending on the situation, the IRS may give you a longer term as noted above, or if necessary, the agency may approve you for a partial payment installment agreement (PPIA). With a PPIA, you make monthly payments until the collection expiration date, and at that time, the remaining debt expires.

What if I can’t afford to pay anything?

Then, talk with a tax attorney about currently non-collectible status. You prove that you cannot afford to pay, and the IRS stops all collection actions against you. However, the agency may still issue a tax lien.

Direct Debit Requirements for Installment Agreements

The amount you owe in back taxes also dictates how you must make your installment agreement payments. If you owe less than $25,000, you can just mail in your monthly payments or make them online before the due date. However, if you owe between $25,000 and $50,000, you must set up a direct debit from your bank account. 

If you don’t have a bank account, you can ask your employer to withhold the payments from your check. If you take this option, you give the IRS consent to contact your employer. Then, when they write you a paycheck, they take out your payment and send it to the IRS. Your employer may be able to charge you processing fees for this option. 

Alternatively, if you don’t want to take either of these routes, you will need to provide the IRS with financial information if you owe over $25k and want to make payments. The financial disclosures that the IRS requires are long and detailed. In most cases, it’s much easier to just agree to set up a direct debit from your account than it is to take this option.

Alternative Payment Options If You Owe Over $10,000

If you don’t want to go through the IRS to set up payments, consider the following options. You may want to consider these options if the agency has already issued a tax lien and you want to pay in full so they release it:

• Liquidating assets – Selling stocks, collectibles, or other assets can help you pay back taxes, but be aware of the fact that you may face capital gains tax if you generate a profit selling certain assets.
• Borrowing against assets – Consider borrowing against your home, business, or other assets to pay back taxes. Note that if a lien has already been issued, you may need to get the IRS to subordinate it before the lender will approve your loan.
• Withdrawing from retirement accounts – If you can borrow from your retirement account, you may want to look into that option. Keep in mind that if you make a withdrawal before age 59.5 years, you will have to pay a 10% penalty plus income tax.

If you decide to pay the taxes with a personal loan or credit card, remember to compare the interest rates between that loan and the IRS. But you should also consider other factors such as tax liens, impact on your credit, and your ability to pay off the loan.

Can I file bankruptcy on $10k to $50k in tax debt?

Only some tax debts are dischargeable in bankruptcy, and liens may survive bankruptcy. Before pursuing this option, consult with a tax or bankruptcy attorney. They can help you figure out what to expect in your situation and whether or not this is an effective option for you.

Get Help When You Owe the IRS Between $10,000 and $49,999 

This is the level of tax debt where the IRS starts to get serious, and the agency has more collection power than almost any other entity. If you want to protect your money and your assets, you need to make arrangements to pay your tax debt before the IRS goes after you.

Ready to get help now? Then, contact us today. We can help you get the best resolution possible for your tax debt.

Lead Tax Attorney at The W Tax Group

Stephen A Weisberg