The One Big Beautiful Bill Act will reduce taxes for many people, but it doesn’t erase existing tax debt or change how the IRS collects unpaid balances.
While the law could affect how much some taxpayers owe going forward, anyone with back taxes still needs to work with the IRS to resolve the debt. If you are behind on taxes, it’s important to act quickly and set up a plan to repay the balance.
“The most important thing a taxpayer can do to help reduce penalties and expenses associated with an IRS notice is to take action right away,” says Michael Raanan, an enrolled agent and the president of IRSvideos.com.
But corresponding with the IRS can be confusing and chaotic.
If you receive any correspondence from the IRS regarding back taxes, follow these steps to take advantage of available resources to pay them off.
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How Do I Know If I Owe the IRS?
There are several ways to discover whether you owe back taxes, including:
— You receive a notice from the IRS in the mail. The IRS will notify you if you owe back taxes via a mailed notice. To avoid tax scams, remember that the agency will never email, text or contact you initially by phone or reach out via social media.
— Log in to your tax account on IRS.gov. Once you log in, you can access your tax records, make or view payments, see the amount you owe and view a breakdown of your liability by tax year.
— File or review tax returns. Determining if you owe back taxes may be as simple as filing or amending a previous year’s tax return.
— Contact the IRS at 800-829-1040. You can also call the IRS for more information on your outstanding tax bill. Keep in mind it may be difficult to reach a real person, particularly during peak tax season months.
Never ignore a notice from the IRS.
“The simple answer is to respond to notices quickly,” says Mitchell Freedman, a certified public accountant and the president and founder of M. Freedman & Co. Inc. in Westlake Village, California.
Tax professionals advise double-checking how much you owe using a couple of the methods above to ensure you have the correct figure, then taking action.
What Happens if I Owe More Than $66,000?
If you owe the IRS more than $66,000, you have what the government considers to be a “seriously delinquent” tax debt. The threshold for this level of debt is adjusted each year. It was $64,000 for tax year 2025 and is $66,000 in 2026. To determine if you are seriously delinquent, the IRS considers the taxes you owe, as well as assessed penalties and interest.
When all administrative remedies to collect this debt are exhausted, the IRS will “certify” taxpayers with seriously delinquent tax debt to the U.S. Department of State. A CP508C notice will be issued, and your passport may be revoked. If you are applying for or renewing a passport, your application may be denied. A taxpayer who is currently overseas may be issued a limited passport to allow them to return to the U.S.
To remove the certification — or avoid it in the first place — begin making timely payments on an IRS-approved installment plan. Other ways to remove the certification include making a compromise offer that the IRS accepts, reaching a settlement with the Department of Justice or filing for bankruptcy.
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How Long Can You Owe the IRS?
Typically, the IRS has 10 years from the date of its first notification to complete collecting back taxes and three years from your filing date (including extensions) to notify you regarding taxes you owe.
“The 10-year clock starts on the date the tax was actually ‘assessed,’ or put on the books,'” Raanan says.
“But the statute date can get extended due to activity on an account, such as a bankruptcy, appeal, filing an offer in compromise and more,” he adds.
When a tax bill goes unpaid over a long period of time, the IRS may begin collecting through enforcement actions, such as issuing a bank levy or filing a tax lien.
Your balance will grow the longer you wait, as the IRS will charge interest on unpaid taxes. Plus, you could be assessed the following penalties.
| Type of Penalty | 2026 Rate | Maximum Limit |
| Failure to file | 5% per month | 25% |
| Failure to pay | 0.5% per month | 25% |
| Combined penalty | 5% (4.5% file / 0.5% pay) | 47.5% |
If your return is more than 60 days late, you may be assessed a minimum fee of $525 or 100% of your underpayment, whichever is less.
Ways to Pay Off Your Tax Bill
If you’re unable to pay the full balance of your tax liability right away, you have options.
“If you feel like you could put it on your credit card and then pay it off in the required 30-day time period, that’s one route,” says Mark Jaeger, vice president of tax operations at Taxwell, the parent company of TaxAct.
“The IRS does offer different types of installment agreements,” he says, noting that interest rates on these plans are around 7%, “which is a lot better than a credit card rate of 18% to 25%.”
Consider the following ways to satisfy your debt with the IRS:
— Get on an installment plan. You can apply to repay your tax bill in monthly payments. While you do, interest will continue to accrue.
— Request an offer in compromise. This allows you to settle your tax debt for less than the full amount you owe. Filing an application is part of the process.
— File and pay what you can. The failure-to-file penalty is higher than the failure-to-pay penalty, so it makes sense to file your taxes and pay whatever you can. After you do, work with the IRS to get on a payment plan or talk to a tax professional about your options.
— Request a hardship determination. If the IRS initiated a bank levy and it’s causing you economic hardship, you may be able to get the levy released. A hardship determination occurs when the IRS reviews your financial situation and determines that you cannot pay anything toward the back taxes at this time because your expenses exceed your necessary living expenses and you have no assets from which to borrow against or liquidate, Raanan says. Penalties and interest continue to accrue while in a hardship status.
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Regardless of which repayment method you choose, it’s important to establish a plan to prevent the IRS from taking or continuing enforcement action.
“Despite the perception of the IRS, resolving IRS back taxes is actually easier than it may appear,” Raanan says.
“For back taxes, most taxpayers can either set up an affordable payment plan or receive a financial hardship approval from the IRS, which puts their back taxes aside until their finances improve. Other taxpayers may qualify for a penalty removal, tax settlement or another type of resolution,” he adds.
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Do You Owe the IRS? How to Find Out originally appeared on usnews.com
Update 03/17/26: This story was published at an earlier date and has been updated with new information.
