This page is for anyone who owes the IRS more than they can pay right now — whether that's a first collection notice, a tax lien that already hit your credit report, or years of back taxes that finally caught up with you. Attorney Michael Goldstein represents individuals and small business owners in Massachusetts, Maryland, and Washington, D.C. (MD and D.C. matters are handled in coordination with local counsel through an of-counsel relationship with Phillips Law Offices). If your tax debt is tied to a business you own, see Small Business Law for related entity and compliance issues. If you're trying to figure out how to reduce tax debt before the IRS escalates collection, start here.

Tax debt doesn't sit still. The longer it goes unresolved, the more it costs and the more leverage the IRS has:

None of this is inevitable. Every one of these escalations can be avoided or reversed — but the earlier you act, the more options you have to reduce tax debt before enforcement starts.

4.1  IRS Payment Plans (Installment Agreements)

An installment agreement lets you pay your full tax balance over time through fixed monthly payments instead of one lump sum. This is usually the right fit if you can afford to pay in full eventually, just not all at once. It doesn't reduce the amount you owe — it restructures how you pay it — but it stops active collection (levies, wage garnishment) as long as you stay current.

4.2  Offer in Compromise: Settle for Less Than You Owe

An Offer in Compromise (OIC) is the IRS program most people mean when they ask how to reduce tax debt for less than the full balance. It's a formal agreement in which the IRS accepts less than what you owe because it genuinely believes that's the most it can collect, given your income, assets, expenses, and future earning potential.

It is not automatic, and it is not the "pennies on the dollar" outcome that late-night ads promise everyone:

That's a meaningful drop from the roughly 21% acceptance rate reported for FY 2024, suggesting the IRS has tightened its review over the past year:

That lower acceptance rate isn't a reason to skip an OIC — it's a reason the offer amount and financial documentation need to be built correctly the first time. Most rejected offers fail because the taxpayer's proposed amount doesn't match what the IRS's own formula says they can actually collect, not because settlement itself is off the table. See the full Offer in Compromise process and eligibility requirements → for how this works step by step.

4.3  Currently Not Collectible (CNC) Status

If you genuinely cannot pay anything right now due to financial hardship, the IRS can classify your account as Currently Not Collectible. This pauses most active collection — no levies, no garnishment — while you're in that status. It's important to understand what CNC is not: it doesn't erase the debt, and penalties and interest continue to accrue while you're in it. CNC buys time and breathing room; it doesn't reduce tax debt on its own, though it's often a bridge to a later Offer in Compromise once your financial picture stabilizes.

4.4  Tax Liens vs. Tax Levies

These two terms get confused constantly, and the difference matters:

A lien can still damage your credit and complicate a home sale or refinance even without a levy ever happening. Levies generally follow a series of required notices, which means there's usually a window to resolve the underlying debt or request relief before one happens.

4.5  Passport Issues from Serious Tax Debt

In cases of "seriously delinquent" tax debt, the IRS can certify the debt to the State Department, which can result in a passport being denied, limited, or revoked — taxpayers in this position often receive IRS Notice CP508C. This is a narrow, high-consequence situation, and it's generally reversible once the underlying debt is resolved through one of the options on this page.

Sometimes — and this is where most "tax relief" companies stop being useful, because most of them aren't law firms and can't evaluate this option at all.

Some older income tax debt can be discharged in bankruptcy, depending on when the return was due, when it was actually filed, and when the tax was assessed. Recent tax debt and payroll (trust fund) taxes generally are not dischargeable. Even when the underlying tax debt is discharged, a tax lien that was filed before the bankruptcy can survive the discharge and continue to attach to property.

This isn't a substitute analysis you can get from an OIC-only tax relief firm — it requires an attorney who actually practices bankruptcy law. Michael Goldstein represents Massachusetts individuals and small business owners directly in Chapter 7, Chapter 11, and Chapter 13 bankruptcy, in addition to IRS resolution work, which means the bankruptcy option gets evaluated with the same seriousness as every other path to reduce tax debt — not dismissed or oversold.

• Chapter 7 Bankruptcy →
• Chapter 13 Bankruptcy →
• Chapter 11 Bankruptcy for Small Businesses →
• Debt Settlement Options → — if your situation involves more than just IRS debt

Every case starts the same way, regardless of which option ends up being the right one:

When you work with Attorney Goldstein, you work directly with him — not a paralegal or associate. He personally reviews your notices, analyzes your options, and builds the strategy. No hand-offs, no runaround.