Owe More than $50,000
Consequences and Resolution Options
What If I Owe More than $50,000 to the IRS?
If you owe more than $50,000 to the IRS, the agency may place a lien on your assets and pursue other collection actions such as garnishments and bank account seizure. You can avoid unwanted collection actions by setting up a payment plan or applying for a relief option, but at this level of tax debt, you will generally need to provide detailed financial information to get accepted.
The important thing is to be proactive. If you contact the IRS and ask for an arrangement, you will get a more favorable outcome than if you wait for the agency to contact you. To get help with unpaid taxes, contact us today—we can even help if you owe between $10,000 and $49,999 or owe over $100,000.
Key takeaways
- Consequences – If you owe $50K+, the IRS may issue tax liens and seize assets.
- Options – You may qualify for monthly payments or a settlement.
- Requirements – To set up payments on $50K+ in tax debt, you must provide financial details.
- Passport – If you owe over $65K, you may lose your passport.
- Get help – The W Tax Group can help whether you owe $50K or over a million.
What Happens If You Owe More Than $50,000 to the IRS?
The IRS considers unpaid taxes over $50,000 to be serious. When you owe this level of back taxes, the agency can and will make advanced collection efforts including asset seizures, bank levies, and wage garnishments to reclaim their money. But you can avoid these collection actions by making arrangements before the IRS starts involuntary collections.
How much are the penalties if you owe $50,000 or more to the IRS?
Late payment and late filing penalties are a percentage of your tax liability. If you don’t file on time, the penalty is 5% of the tax, assessed monthly until you file. The late payment penalty is 0.5% to 1% of the tax due, assessed monthly until you file.
These penalties can each get up to 25% of your balance, and they stack on top of each other. Thus, the maximum late payment and late filing penalty can be up to 50% of your balance. If you owe $50,000, that’s an additional $25,000 in penalties.
Will the IRS take your passport if you owe over $50,000?
Only if you owe over $65,000 as of 2025. The IRS certifies your tax debt to the State Department once it reaches “seriously delinquent” status which is indexed to inflation, and as of 2025, this happens when you owe $65,000 or more. However, you can avoid this by setting up payments before the IRS contacts the State Department.
IRS Payment Options for Taxpayers Who Owe $50k+
If you owe more than $50,000 to the IRS, you have the same resolution options as someone who owes a smaller tax liability, but generally, the IRS will look more closely at your financial situation before making an agreement with you. Here are the main options:
- Installment agreement – You make monthly payments on your tax bill until it’s paid off in full. If you owe more than $50,000 in assessed tax, you may be eligible for a non-streamline installment agreement.
- Partial payment installment agreement – You make monthly payments on your tax bill until the collection statute expiration date (CSED), and the IRS agrees to write off any remaining liability after that date.
- Offer in compromise – You make a lump sum payment on your tax liability, and the IRS agrees to write off the remaining amount.
- Hardship status – The IRS stops collection actions on your account because you cannot afford to pay, but the agency reviews your financial situation every year or two.
How to set up payments online if you owe over $50k+
You can only set up a payment plan online if you owe less than $50,000. Typically, as long as your monthly payment is enough to pay off the tax bill within 72 months or less, the IRS will automatically approve your agreement. If you owe over $50,000, you can only use the online option if you make a payment to get below $50,000 in tax, interest, and penalties.
How to set up payments if you owe over $50,000
If you cannot get your balance under $50,000, you can apply for a payment plan over the phone or through the mail. In both cases, you will need to provide all of the information on Form 9465. You will also need to submit Form 433-F (Collection Information Statement). This form requires detailed information about your finances, and it helps the IRS ensure that you are making the largest payment possible on your tax bill.
What if the tax bill is due to my spouse?
If the tax bill is due to your spouse and they incurred it without your knowledge or coerced you into signing a false return, you may qualify for innocent spouse relief. The requirements for this program are very strict, and you may want to talk with a tax pro to see if it’s a viable option in your situation.
Alternative Ways to Pay Back Taxes
Unfortunately, if you set up a payment plan through the IRS, the agency will most likely issue a tax lien if you owe over $50,000. They will also seize your future tax refunds and apply them to your bill. While you make payments, your balance will also continue to accrue interest and a penalty of 0.25% per month.
To avoid these consequences, you may want to explore the following ways of paying off back taxes:
- Refinancing Your Home – If you can get an attractive interest rate, you may want to consider rolling your tax debt into your home loan or paying it with a home equity line of credit. Be aware, however, that if the IRS has already issued a tax lien, they will probably need to subordinate it before the lender will approve the loan.
- Life insurance – Consider borrowing against or cashing out whole life insurance policies, but before taking this route, you should strongly consider the impact this will have on your family if you die.
- Retirement accounts – If possible, you may want to borrow from your retirement account. If you cash out an account early, note that you will face a penalty and income tax on the withdrawal.
Alternative Payment Options for Businesses
If you own a business and owe back taxes, you may want to explore the following payment options to get caught up on your back taxes.
- Account receivable factoring for businesses – If your business has accounts receivables (invoices owed to you), you may be able to borrow against them or sell them. Crunch the numbers before taking this route as these types of loans often come with a high cost.
- Inventory or equipment loans – You may also be able to get loans against inventory or business equipment. Often, lenders will give you a relatively low interest rate if you have valuable collateral that you can put up.
- Selling equity in your business – You may also be able to sell equity shares in your business to friends, family, or outside investors if you need additional cash flow to cover tax liabilities.
- Point-of-sale loans – Many POS or payment processing systems such as Square or Paypal will offer you loans based on your sales history. This can be an easy way to get cash fast, but it’s important to note that these loans charge a flat fee that can often be higher than the annual interest rate on a traditional loan. For repayments, the lender takes a percentage of your sales so you also need to think about how that will affect your future cash flow.
FAQs About Owing $50K or More in Back Taxes
Owing any amount of money to the IRS can be scary and stressful, but when you owe $50K or more, you may have a lot of questions. Check out the following FAQs or contact us directly to talk about your concerns.
Can I declare bankruptcy on $50,000 of tax debt?
Filing bankruptcy will create a stay that temporarily stops the IRS from pursuing collection actions, but you will not necessarily be able to eliminate all of your tax debt in bankruptcy. Talk with a bankruptcy or tax attorney for guidance, but typically, you can only get rid of income tax debts that are at least three years old if you file bankruptcy.
Will I go to jail if I owe more than $50,000 to the IRS?
No, not being able to afford your taxes is not a crime. However, if you try to evade taxes by filing false returns or lying about assets on collection information statements, you can face criminal charges that may lead to penalties and jail time.
Will the IRS take my home if I owe over $50,000?
The IRS has the right to seize your primary residence if you owe over $5,000 and do not make arrangements to pay the tax debt. However, IRS home seizure is very rare and only used as a very last resort.
How long does the IRS have to collect tax debt?
The IRS has 10 years from the date of assessment to collect unpaid taxes, but there are many different actions (for example, filing bankruptcy or applying for an offer in compromise) that can pause and extend the deadline.
Can I get a guaranteed installment agreement if I owe over $50,000?
No, to qualify for a guaranteed installment agreement, you must owe $10,000 or less. You also must be able to pay off the liability in three years or less, and you must have a history of compliance.
How do I find out how much I owe the IRS?
A tax attorney can help you figure out how much you owe. Alternatively, set up an IRS online account and look at your balance owed. Or check your last IRS notice but be aware that there may be additional interest or penalties since it was sent.
What if you owe more than $1 million to the IRS?
If you owe more than $1 million and are not in an arrangement with the IRS, the agency will assign your case to a revenue officer. The revenue officer will look closely at your situation, and they will require you to pay off the tax liability in the fastest way possible. If you do not cooperate, they will pursue involuntary collections and start the process of seizing your wages, assets, and accounts.
IRS Back Tax Assistance Is a Phone Call Away
There is no liability collector more intimidating than the IRS, and owing back taxes is like having a dark cloud hovering over your life. So if you’re feeling stressed and worried about how to pay off your back taxes, you should realize this issue has been solved thousands of times before and it can be done for you as well.
