If you’re behind on taxes, you’re not alone — and you’re not out of options. Millions of Americans owe the IRS money, and for Maryland residents, the stress can feel overwhelming. The good news? The IRS offers several ways to resolve tax debt legally and affordably — and with the right help, you can move forward with peace of mind.
In this guide, we’ll break down how to settle IRS debt, explain your rights, and outline the top IRS debt relief options available for Maryland residents.
Why Acting Fast Matters
The longer you wait to deal with IRS debt, the worse it can get. Penalties and interest build up quickly, and the IRS has powerful tools to collect what you owe — including wage garnishments, bank levies, and federal tax liens.
But by taking action early, you can:
- Avoid enforced collection (levies) and address lien issues
- Stop new penalties from piling up and reduce some penalties under certain plans
- Preserve critical 30-day deadlines to appeal liens/levies (Collection Due Process or “CDP”)
- Reduce stress and uncertainty
Step 1: Know Exactly What You Owe
Before considering your options, you’ll need to know the full picture.
You can view your tax account details by creating an online account at IRS.gov. Create or sign in to your IRS online account to see your balances, tax years, notices, and payment options. Each assessed tax has its own 10-year collection clock (the Collection Statute Expiration Date, or CSED).
Look for:
- Total amount due (tax, penalties, interest)
- Year(s) of unpaid taxes
- Whether a deadline is running (e.g., 30 days after LT11/Letter 1058 or CP90 to request a CDP hearing)
- Penalties and interest
- Any notices sent to you
If the IRS says you owe but you’re unsure why, Beverly’s Winstead Law Office can help you request account transcripts and verify the accuracy of your balance.
Step 2: Understand Your IRS Debt Relief Options
There is no one-size-fits-all solution. The IRS offers multiple paths to resolve tax debt, depending on your income, financial situation, and ability to pay. Depending on your finances and ability to pay, consider:
1) Short-Term Payment Plan (up to 180 days)
- For balances under $100,000; no setup fee; interest/penalties continue.
2) Long-Term Installment Agreement (monthly payments)
- Streamlined online if you owe $50,000 or less and have filed all required returns (typically up to 72 months; direct debit required for $25k–$50k).
- While on an approved plan, the failure-to-pay penalty rate drops to 0.25% per month (instead of 0.5%–1%). Interest still accrues. Refunds are applied to your balance.
- Requesting or having an installment agreement generally pauses new levies while the request is pending; certain actions also suspend/extend the collection clock.
3) Partial Payment Installment Agreement (PPIA)
If you can’t full-pay before the CSED, the IRS may accept a partial-pay plan based on your disposable income and assets; the remaining balance can expire when the CSED runs. These often require full financials and periodic reviews; sometimes the IRS requests a limited CSED extension.
4) Offer in Compromise (OIC)
Settle for less than you owe when your reasonable collection potential is lower than the debt. You must be current with all required filings. Application fee is $205 (waived for qualifying low-income applicants). If accepted, you must stay compliant for 5 years; the IRS keeps any refund for the year of acceptance and may keep refunds while the offer is pending. OICs toll the collection clock while pending. In FY 2024, the IRS accepted 7,199 of 33,591 offers (~21%).
5) Currently Not Collectible (CNC) Status
If paying anything would prevent you from meeting necessary living expenses, the IRS can pause active collection. Interest/penalties continue, the IRS may still file a Notice of Federal Tax Lien, and your case can be periodically reviewed. The 10-year collection period generally continues to run.
6) Penalty Relief (Abatement)
- First-Time Abate (FTA) for certain failure-to-file/failure-to-pay penalties if you have a clean 3-year history; or reasonable-cause relief (e.g., serious illness, disaster).
- Special relief for 2020/2021: the IRS is automatically waiving failure-to-pay penalties for many taxpayers meeting specific criteria (assessed tax < $100k; certain notice windows).
7) Relief for Joint Returns (Innocent Spouse / Separation of Liability / Equitable Relief)
If the debt is due to your spouse’s (or former spouse’s) items on a joint return, you may request relief with Form 8857; the IRS considers all three types of relief.
8) Bankruptcy (sometimes)
In limited cases, older income tax debts may be dischargeable; see Publication 908 and consult counsel.
Know Your Rights & Key Deadlines
- After a Final Notice of Intent to Levy (e.g., LT11/Letter 1058 or CP90), you generally have 30 days to request a CDP hearing; timely requests usually stop levies while Appeals considers your case. You also have rights to appeal lien filings.
- The IRS generally has 10 years from assessment to collect (the CSED), though certain actions (like filing an OIC or filing a Collection Due Process hearing) can suspend/extend it.
- Passports: seriously delinquent tax debt (threshold indexed; about $59,000 and above) can trigger certification to the State Department, affecting issuance/renewal; good-faith resolution (IA/OIC/CNC, etc.) can avoid or reverse certification.
Maryland-Specific Considerations
While IRS programs apply federally, working with a tax attorney in Maryland gives you key advantages:
- Local experience: Maryland’s state tax rules may affect your overall liability
- Convenience: Easier communication, meetings, and document handling
- Personalized strategy: Not every IRS form or relief program is right for your case
A Maryland-based attorney can also help if you’re dealing with both federal and state tax debt.
What Not to Do
- Do not ignore notices or miss appeal deadlines. (You can lose levy protections.)
- Do not agree to payments you can’t afford (defaulting can restart enforcement).
- Be wary of national “tax relief” outfits promising guaranteed settlements. Use licensed professionals who will review your actual finances and rights (e.g., CDP, CAP, Appeals).
Many taxpayers waste time and money on national “tax relief” chains that promise miracles but deliver confusion. Instead, speak with a licensed tax attorney who will evaluate your options honestly and protect your rights.
Ready to Settle Your IRS Debt in Maryland?
At The Law Offices of Beverly Winstead, LLC we help individuals and business owners across Maryland take back control from the IRS. Whether you need help filing for an installment agreement, exploring an offer in compromise, or reviewing your debt for errors, we’re here to help you every step of the way.
Do not lose sleep over tax debt. Let’s settle this — the right way.