IRS Tax Debt Resolution Attorneys

IRS Tax Liens

A federal tax lien is the government’s legal claim against a taxpayer’s property when tax debt is not paid. The IRS explains that the lien arises automatically after the IRS sends the first notice demanding payment and the taxpayer fails to pay the amount in full.

A tax lien can affect real estate, business assets, personal property, and property acquired after the lien arises. Even though federal tax liens no longer appear on major credit reports, they can still create serious problems when selling, refinancing, borrowing, or dealing with business property.

Tax lien issues may require analysis of:

• Whether the IRS properly filed the lien
• Whether the underlying tax debt can be resolved
• Whether lien withdrawal may be available
• Whether lien subordination or discharge may help with sale or refinancing
• Whether bankruptcy affects personal liability or the lien
• Whether the lien attaches to assets with equity

The IRS states that it may withdraw a Notice of Federal Tax Lien in certain situations, including when the taxpayer enters into an installment agreement, when withdrawal may allow taxes to be paid more quickly, or when withdrawal is in the best interest of both the taxpayer and the government.

IRS Levies, Bank Levies, and Wage Garnishment

A lien is a legal claim. A levy is different. A levy is when the IRS actually takes property or money to collect the tax debt.

The IRS says it may levy wages, bank accounts, Social Security benefits, retirement income, cars, boats, real estate, and other property to satisfy tax debt. It may also seize future federal or state tax refunds and apply them to the federal tax liability.

If you are facing a bank levy, wage levy, or other collection action, the right response depends on the facts. Possible options may include:

• Requesting a payment arrangement
• Seeking levy release due to hardship
• Submitting financial information to the IRS
• Requesting Currently Not Collectible status
• Evaluating an Offer in Compromise
• Reviewing appeal rights
• Considering bankruptcy-related options where appropriate

The earlier the issue is addressed, the more options may be available.

Passport Problems Caused by Serious IRS Tax Debt

Some taxpayers with large unpaid federal tax debt may face passport-related consequences.

The IRS states that it certifies seriously delinquent tax debts to the State Department, and the State Department generally will not issue passports to taxpayers after receiving that certification. The State Department may also deny a passport application or revoke a current passport.

For 2026, the IRS defines seriously delinquent tax debt as legally enforceable unpaid federal tax debt totaling more than $66,000, including penalties and interest, adjusted yearly for inflation.

Tax debts are generally not certified to the State Department if they are being timely paid through an approved installment agreement, being timely paid through an accepted Offer in Compromise, suspended due to a pending collection due process hearing, or subject to other listed exceptions. The IRS also says it will not certify a taxpayer who is in bankruptcy, has a pending installment agreement request, has a pending Offer in Compromise, or has an account determined to be Currently Not Collectible due to hardship.

For taxpayers with travel needs, passport issues should be addressed quickly.

Bankruptcy and IRS Tax Debt

IRS tax debt and bankruptcy often overlap. An Offer in Compromise may be the right option for some taxpayers, but it is not always the only option. In some cases, bankruptcy analysis may be important, especially when the taxpayer has older income tax debt, other unsecured debts, lawsuits, judgments, business debt, or unaffordable collection pressure.

Bankruptcy may help with certain tax debts, but not all tax debt is dischargeable. Recent tax debt, payroll tax liability, trust fund recovery penalties, tax liens, and unfiled or late-filed returns require careful analysis.

A bankruptcy-related tax debt review may consider:

• Whether the tax debt is income tax debt
• The age of the tax years involved
• When the returns were due
• When the returns were filed
• Whether the IRS assessed the tax
• Whether tax liens were filed
• Whether the taxpayer owns property with equity
• Whether Chapter 7 or Chapter 13 may be relevant
• Whether an IRS payment plan or Offer in Compromise is better than bankruptcy
• Whether bankruptcy should occur before or after IRS collection resolution

Phillips Law Offices has deep experience with bankruptcy and debt relief matters, including Chapter 7, Chapter 13, and Chapter 11 work. That background matters because IRS tax debt should not be reviewed in isolation when the taxpayer also has other serious debt problems.

Business Owners With IRS Tax Debt

Business tax debt can create additional pressure. A business owner may be dealing with unpaid income taxes, payroll taxes, employment tax deposits, business tax returns, personal guarantees, vendor pressure, or cash flow issues.

Business tax debt cases may involve:

• IRS business notices
• Payroll tax problems
• Trust fund recovery penalty exposure
• Business bank levies
• Tax liens against business property
• Personal liability concerns
• Installment agreements
• Offers in Compromise for business or individual liabilities
• Bankruptcy or restructuring analysis

The IRS requires employers applying for an Offer in Compromise to have made required federal tax deposits for the current and past two quarters before applying.

For business owners, the goal is not just to address the IRS balance. The goal is to understand whether the business can survive, whether the owner has personal exposure, and which resolution path protects the taxpayer’s long-term financial position.

Why Work With a Law Firm Instead of a Tax Relief Company?

Many tax relief advertisements focus on one message: settle IRS debt for less than you owe. That may be possible in some cases, but it is not guaranteed and it is not the right solution for every taxpayer.

A law firm can evaluate the broader legal and financial picture, including collection risk, liens, levies, bankruptcy, business debt, personal exposure, and whether an IRS settlement is actually the best available strategy.

Phillips Law Offices does not treat every IRS case as the same. The first step is understanding the taxpayer’s full situation, including:

• How much is owed
• What tax years are involved
• Whether all returns are filed
• Whether the IRS has filed liens
• Whether levies or garnishments are threatened
• What the taxpayer earns
• What assets the taxpayer owns
• What expenses are necessary
• Whether business debt is involved
• Whether bankruptcy may help or hurt
• Whether a payment plan, settlement, hardship status, or other approach is most appropriate

What to Bring to an IRS Tax Debt Consultation

A productive consultation starts with the right information. If available, gather:

• Recent IRS notices
• IRS account transcripts
• Tax returns for the years at issue
• Pay stubs or profit-and-loss statements
• Bank statements
• Mortgage or rent information
• Vehicle loan information
• Retirement account information
• Business financial records
• List of monthly living expenses
• Any lien or levy notices
• Passport-related notices such as CP508C
• Bankruptcy or prior debt case information, if applicable

Do not delay simply because you do not have every document. The important first step is identifying the IRS problem and determining what needs to happen next.

IRS Tax Debt Resolution in Maryland, Massachusetts, and Washington D.C.

Attorney Jill Phillps serves clients in Maryland and Washington D.C. While Attorney Michael Goldstein represents client’s in Massachusetts. 

Phillips Law Offices can help evaluate the federal IRS tax debt problem and related debt issues for clients in the jurisdictions where the firm practices.

Frequently Asked Questions About IRS Tax Debt

Can I settle IRS tax debt for less than I owe?

Possibly. An Offer in Compromise may allow an eligible taxpayer to settle IRS tax debt for less than the full amount owed. The IRS reviews income, expenses, ability to pay, and asset equity before deciding whether to accept an offer.

Is an Offer in Compromise guaranteed?

No. The IRS does not accept every Offer in Compromise. The taxpayer must qualify, provide financial information, and submit an offer that reflects what the IRS believes it can reasonably collect.

Can I apply for an Offer in Compromise if I am in bankruptcy?

Generally, no. The IRS states that a taxpayer is eligible to apply for an Offer in Compromise only if the taxpayer is not in an open bankruptcy proceeding.

What is the difference between a payment plan and an Offer in Compromise?

A payment plan allows the taxpayer to pay the IRS over time. An Offer in Compromise asks the IRS to accept less than the full balance owed if the taxpayer qualifies. The right option depends on income, expenses, assets, equity, compliance, and collection risk.

What is Currently Not Collectible status?

Currently Not Collectible status is a temporary IRS hardship status. It does not erase the tax debt, but it may pause certain collection activity if the IRS determines the taxpayer cannot pay while meeting basic living expenses.

Can the IRS file a tax lien?

Yes. The IRS may file a Notice of Federal Tax Lien in the public record to notify creditors of the tax debt. A federal tax lien is a legal claim against property, including property acquired after the lien arises.

Can the IRS levy my bank account or wages?

Yes. The IRS may levy wages, bank accounts, Social Security benefits, retirement income, vehicles, real estate, and other property to collect tax debt.

Can IRS tax debt affect my passport?

Yes, in serious cases. The IRS may certify seriously delinquent tax debt to the State Department, which can lead to denial, limitation, or revocation of a passport. For 2026, the IRS threshold is more than $66,000 in legally enforceable unpaid federal tax debt, including penalties and interest.

Can bankruptcy help with IRS tax debt?

Sometimes. Certain older income tax debts may be dischargeable, but many tax debts are not. Payroll taxes, trust fund recovery penalties, recent tax debt, tax liens, and unfiled or late-filed returns require careful legal analysis.

Should I hire an attorney for IRS tax debt?

If the IRS has filed a lien, threatened a levy, rejected a payment arrangement, certified debt for passport action, or if bankruptcy may be relevant, speaking with an attorney can help you understand the full range of options before agreeing to a resolution.