Published: February 23, 2025

By: Kari Brummond, EA|Reviewed by: Charles P. Corsello, EA

Owe Over $100,000 to the IRS? Here’s Exactly What to Do Next

100k Tax Debt

Owing over $100,000 to the IRS can be very stressful and for good reason - at this level of tax debt, the agency becomes very likely to garnish your wages, freeze bank accounts, or seize your assets. However, if you set up a payment plan or get approved for a relief program, you can avoid unwanted collection actions.

This post outlines what to expect if you owe over 100k, how to find help and IRS resolution options. To get guidance now, use TaxCure to find an experienced, trustworthy tax pro.

Key takeaways - what if you owe over $100,000?

Consequences - Federal tax liens, wage garnishments, and asset seizure.
Passport at risk - The IRS can tell the State Department to take away your passport.
Payments - May qualify for monthly payments if you provide details about your finances.
Settlements - If you prove you can't pay in full, the IRS may settle for less than owed.
Next steps - Use TaxCure to find a tax pro before the IRS starts taking your assets.

Table of Contents

Consequences of Owing $100K+

The IRS takes six-figure tax debt very seriously. In fact, most collection actions start at a much lower level of tax debt. Take a look at what can happen when you owe over $100 grand.

Penalties

Penalties can get up to 50% of your balance. If you owe $100,000, that's up to $50,000 in penalties alone.

The failure to pay penalty is .5% per month. It increases to 1% per month after a certain period of delinquency. And it can reach up to 25% of your balance. So, if you owe $120,000, the late payment penalty can max out at $30,000.

If you also file late, you will incur a failure-to-file penalty. This penalty is 5% of the unpaid tax every month until you file, and it also maxes out at 25%. For instance, if you owe $110,000 but you file two months late, you will incur a penalty of $11,000.

Interest

The IRS will also add interest to your balance at the Federal Short Term Rate plus three points. As of Q1 2025, the IRS interest rate is 7% and it compounds daily. If you owe $100,000, the interest alone will be $7250.10 by the end of the year (based on a 7% interest rate).

Interest also accrues on penalties. If you owe $100,000 and max out at $50,000 in penalties. The interest would increase to over $10,000 for the year (based on a 7% rate).

Federal Tax Lien

The IRS may issue a tax lien on any level of tax debt, but generally, the agency only issues a tax lien if you owe over $10,000. Additionally, you can often avoid a tax lien if you set up a payment plan proactively on your tax debt, but unfortunately, once you owe over $100,000, the agency will almost always file a tax lien even if you set up payments.

Tax liens attach to all of your current and future assets. Sell a car? The IRS will be entitled to the proceeds (after you pay higher priority liens such as your car loan). Refinance your home? The lender will not approve the loan unless the IRS agrees to subordinate its lien. Inherit property? The lien will attach to the newly inherited property.

The IRS does not send reports of tax liens to the credit bureaus. However, tax liens are public records and as such can hurt your ability to borrow funds.

Tax Levies and Asset Seizure

If you owe over $100,000, the IRS may attempt to collect the debt by seizing your assets through a tax levy. The IRS has the right to seize almost any asset you own with very limited exceptions. The agency may garnish your wages and seize your bank accounts, investment accounts, and retirement accounts. The IRS can also seize physical assets such as your car or even your home in extreme cases.

The IRS must send you a Notice of Final Levy and Your Right to a Hearing before garnishing wages or seizing assets. When you receive this letter, you have 30 days to appeal. If you don't take action, the IRS will seize your assets, and once the process is in place, it is hard (but not impossible) to reverse. If the IRS believes collection is in jeopardy, they do not have to give you 30 days' advance notice before seizing assets.

Passport Revocation

At $100,000, your tax debt is considered seriously delinquent, and if you don't make payment arrangements, the IRS can certify your debt to the State Department. Then, the State Department will revoke your passport or refuse to issue/renew your passport.

As of 2025, the seriously delinquent threshold is $65,000 - it's indexed to inflation and increases annually. If you make a payment to get the debt under this level before the IRS certifies your tax debt, you will be able to keep your passport. Once the IRS notifies the State Department, you cannot just make a payment to get your passport back. Instead, you will need to get a payment arrangement or a relief program (like an offer in compromise) approved by the IRS.

Loss of Tax Refunds and Government Payments

If you owe taxes or have unfiled tax returns, the IRS will keep your tax refunds. The IRS can also seize state tax refunds - typically, the agency sends a CP504 notice before taking your state refund, but it doesn't have to notify you. The IRS can also seize government payments if you are a contractor.

Assignment to a Revenue Officer

At this level of tax debt, the IRS may assign a Revenue Officer to your case. These IRS employees are personally tasked with collecting your unpaid tax debt, and once they're assigned, your case will get a lot more scrutiny than when it's in the automated collection system.

Revenue Officers will contact you directly through the mail and once they've made initial contact, over the phone as well. They generally do not make unexpected house calls, but they may request a meeting at your home, office, tax pro's office, or IRS office. If a Revenue Officer believes that fraud is involved, they will recommend that your account be reviewed for fraud. Although criminal charges are rare, they are possible if you commit tax evasion or criminal tax fraud.

$50,000 in Tax Debt Vs. $100,000 or More

There are pretty significant differences between owing $50,000 and $100,000 in IRS tax debt. Namely, it's easier to set up payments when you owe $50,000 or less, and heightened collection actions are a bigger risk when you owe over $100,000.

Payment options - If you owe $50,000 or less and have a history of paying on time, you can set up a payment plan online without providing details about your assets. If you owe over $50,000, you typically need to provide the IRS with very detailed financial information to get a payment plan approved.
Collection actions - The IRS may garnish wages or seize assets whether you owe $50,000 or $100,000 or more. However, if you owe less than $50,000, you don't have to worry about losing your passport. Also, the threat of getting assigned to a Revenue Officer is greater when you owe over $100,000.

Resolution and Relief Options If You Owe Over $100k

Payment options vary based on your compliance history and your personal finances. Take a look:

Installment Agreement

If you make a lump sum payment to get your balance under $50,000, you can set up a streamlined installment agreement. Otherwise, you may qualify for a non-streamlined agreement which typically requires you to file a Form 433-F collection information statement.

The IRS generally gives you up to 72 months to pay off the tax debt, but you may get longer if you cannot afford the minimum payments on a 72-month term.

Pros - Predictable monthly payment, interest at the prime rate plus 3, and low monthly penalty of .25%.
Cons - Tax lien issued, IRS will seize tax refunds and apply them to balance until paid in full.

Offer in Compromise (OIC)

An offer in compromise lets you settle for less than owed. But to qualify, your offer must represent most of the money in your assets and your disposable income over the next 12 to 24 months.

After you pay the offer, the IRS will release the tax lien, but then, they will watch your account for the next five years. If you don't pay or file on time, they can rescind the offer and demand payment in full.

Pros: Settle for less than owed.
Cons: Low acceptance rates. Must provide full details about income, assets, and expenses. Five-year contingency period.

Note that the IRS may approve offers in compromise based on doubt of liability (a legitimate dispute that you owe the tax) or effective tax administration (it wouldn't be fair to make you pay the full bill). Those options are rare, but if you think they might apply to your situation, you should reach out to a tax professional.

Partial Payment Installment Agreement (PPIA)

PPIAs are for taxpayers who cannot afford minimum monthly payments to pay off their tax debt by the Collection Statute Expiration Date (CSED). The CSED is the last day the IRS can legally collect the debt, and it's 10 years after assessment. You make payments until that date, and then, you do not have to pay the remaining balance.

Pros: Lets you pay off tax debt for less than owed.
Cons: Requires a financial disclosure. If your finances improve, the IRS can require payment in full.

Currently Not Collectible (CNC)

You prove you have no money or assets to pay off the tax debt, and then, the IRS stops all collection actions against you. If your finances improve while you're on CNC status, you resume making payments. If not, the debt goes away at the end of the collection period.

Pros: Protects you from collection actions.
Cons: Only available if you prove that you truly cannot afford to pay. IRS may file a tax lien.

Penalty Abatement

You should always request penalty abatement, and at at this level of tax debt, it can save you tens of thousands of dollars. The IRS offers abatement for first-time penalties and penalties incurred due to reasonable cause or administrative error.

Pros: Easy to request. Call or file Form 843.
Cons: May face long hold times if you call the IRS.

Bankruptcy

If tax debt is your only debt, bankruptcy may not be the best option, but if you have a lot of unmanageable consumer debt as well, you may want to consider it. Generally, you can only discharge tax debts that are at least three years old with other restrictions, and depending on the type of bankruptcy you file, you may need to make payments.

Pros: Automatic stay on collections. May discharge some tax debts.
Cons: May not discharge all tax debts. Tax liens may survive bankruptcy.

Action Plan for Taxpayers Who Owe $100K Plus

Owing this level of tax debt can feel very overwhelming. The right steps forward depending on the situation, but consider the following:

- Confirm how much you owe - Use the IRS online account to confirm exactly how much you owe. You can also see if any of the debt is about to expire and plan strategically if so.
- File outstanding returns - You must file outstanding returns to figure out how much you owe. The IRS also requires you to be on top of filing before approving a payment plan. Often, you only need to file the last six years - even if you're further behind.
- Review financials and make a plan - Your resolution plan depends on your budget. If you can easily make monthly payments, set up an installment agreement. If you cannot afford payments but can come up with a lump sum, look into an offer in compromise. If you want to wipe the slate clean and avoid tax liens, you may need to take out a loan or cash out investments to pay your tax debt.
- Communicate with the IRS - Being proactive about making arrangements helps you to avoid unwanted collection actions. The IRS will also talk with you about your options.

Talk with a tax pro - Consider consulting with a tax pro to get guidance on the best resolution options and to have someone negotiate with the IRs on your behalf for penalty abatement, payment plans, and other relief options.

When looking for help, use TaxCure to find a trustworthy local tax pro who's experienced with your tax concern. Stay away from the big tax relief firms that are more focused on sales than providing individualized help to their clients.

Common FAQs

Can I go to jail for owing $100,000?

No, owing over $100,000 is not a crime. You will not go to jail. However, evading taxes and committing criminal tax fraud is a crime, and it can involve much smaller amounts of money. If you believe that you may have committed a crime, reach out to a tax attorney.

Will the IRS take my house?

Usually, not. The IRS has the right to seize homes if necessary, but the agency will use every collection measure before resorting to that drastic of a step.

Does the IRS really revoke passports?

Yes, the IRS can tell the State Department to take away your passport, but only if you are seriously delinquent. As of 2025, that's $65,000 in tax debt and penalties.

Can I get rid of IRS debt through bankruptcy?

In some cases. You can typically only discharge income taxes that are at least three years old, but some other taxes and/or penalties may also qualify.

Get Help on TaxCure Now

Working with a tax professional can help you get peace of mind and find the best solution possible. To learn more and to avoid the aggressive collection actions that come with this level of tax debt, use the search feature to find an experienced tax pro today.