What to Do If You Owe the IRS More Than $10,000

by | Jun 30, 2025 | Uncategorized

When your IRS tax debt climbs above $10,000, the pressure can start to feel unbearable. For many individuals and business owners, this marks a tipping point—where interest and penalties pile on quickly and the threat of enforcement action becomes very real. But here’s the good news: the IRS has programs to help, and you have the legal right to seek resolution. You just need to act before the situation worsens.

Step 1: Respond to IRS Notices Immediately Don’t toss IRS mail into a drawer and hope for the best. Letters from the IRS spell out exactly how much you owe and what actions are coming if you don’t respond. If you’ve received a CP14, CP504, or LT11 notice, you’re likely already in collections. Read the letters, mark the deadlines, and take the content seriously. It’s better to be proactive than reactive when dealing with federal tax debt.

Step 2: Get the Full Picture With an IRS Transcript The IRS keeps a full record of your account activity, including how much you owe, for what years, and which penalties and interest have accrued. You can get this online at IRS.gov or request it via mail. With your transcript in hand, you’ll be better positioned to understand your liability and chart a plan forward.

Step 3: Know Your Rights and Your Options The IRS offers multiple resolution tools to taxpayers based on their financial situation: Installment Agreements allow for full repayment over time through manageable monthly payments. Offer in Compromise is a settlement program where you pay less than the full balance due if you can prove financial hardship. Currently Not Collectible status halts collection activities temporarily if you’re unable to pay. Penalty Abatement can reduce or eliminate fines if you have reasonable cause for your non-compliance, such as illness, loss of income, or natural disaster. In some cases, bankruptcy may discharge older tax liabilities, though this option is complex and should be evaluated carefully.

Step 4: Avoid Rash Decisions When people are afraid, they often make hasty choices. Don’t put the balance on a high-interest credit card. Don’t ignore the problem, hoping it will disappear. And don’t assume the IRS won’t act. Once your balance exceeds $10,000, you’re at risk of serious consequences like liens and levies. Thoughtful, informed action is your best path forward.

Step 5: Work With a Qualified Tax Attorney For debts of this size, having legal representation can significantly strengthen your position. A tax attorney understands not just the programs available, but also how to protect your rights if things escalate. An attorney can negotiate on your behalf, prepare documentation, and help you avoid or remove liens and garnishments. Whether you’re dealing with audits, collections, or complicated financials, experienced legal guidance gives you clarity and leverage.

If your tax debt exceeds $10,000 and you’re unsure where to begin, COTTS Law is ready to guide you through the process. Attorney Daniel Cotts brings decades of legal and financial expertise to each case, offering personalized support and aggressive advocacy. Contact us today for a free consultation and let’s get your future back on track.

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About Daniel T.A. Cotts

Daniel is a skilled Tax Attorney who moved to Corpus Christi in 2019 to expand his practice and return to Texas. With over 26 years of experience in the legal profession, Daniel brings a wealth of knowledge of Taxation, IRS Dispute representation & resolution, Estate Planning, Accounting, and Business & Contract Law to South Texas.

 

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