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Every Saturday, we open the mailbag, pour some strong coffee, and tackle the tax questions keeping America awake at 2 a.m. Here are this week’s questions:
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I know I owe the IRS, but I haven’t heard from them in a long time. Why?
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Because they’re not in a rush. You are.
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The IRS operates on its own timeline, and silence is not forgiveness. It’s processing. Their systems are backed up, underfunded, and handling millions of cases at once. But your debt is sitting in a queue, accruing interest and penalties every single day they don’t contact you.
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Here’s what’s actually happening behind the curtain: the IRS has up to 10 years from the date they assess your tax debt to collect it. That deadline is called the Collection Statute Expiration Date (CSED). During the 10-year window, they can file liens, levy your bank accounts, garnish your wages, and seize assets.
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The silence usually means one of three things: They’re still processing your case. They sent notices to an old address you never updated. Or they’re just getting to you. The IRS was massively backlogged post-COVID and is still catching up.
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The worst thing you can do is interpret silence as safety. Interest compounds daily. Penalties stack. And the longer you wait, the fewer options you have to negotiate.
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The best thing you can do right now is pull your IRS transcript at IRS.gov to see exactly what they have on file. Then you’ll know what you’re working with instead of guessing. Knowledge is cheaper than surprises when the IRS is involved.
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Can tax debt actually be forgiven or eliminated?
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Short answer: sometimes. Longer answer: it depends on your situation, and the IRS isn’t running a charity — but they are more flexible than most people think.
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There are a few legitimate paths:
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Offer in Compromise (OIC). This is the one you’ve seen advertised on late-night TV. “Settle your tax debt for pennies on the dollar!” It’s real, but it’s not easy. The IRS will only accept an OIC if they genuinely believe they can’t collect the full amount from you. They’ll dig through your income, assets, expenses, and future earning potential. If you’re making good money and have assets, they’ll probably say no.
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Currently Not Collectible (CNC). If you truly can’t pay — like, paying would mean you can’t afford food or rent — the IRS can temporarily pause collection. Your debt doesn’t disappear, and interest still accrues, but they stop coming after you while your financial situation is dire.
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Installment agreements. The most common path. You set up a monthly payment plan and chip away at it. The IRS is surprisingly reasonable about these if you approach them proactively rather than waiting for them to come to you.
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The 10-year statute. The IRS has 10 years to collect from the date of assessment. After that, the debt technically expires. But don’t try to run out the clock. They know the deadline too, and they get aggressive near the end.
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None of these paths are DIY-friendly. If you owe a significant amount, talk to a tax professional before you talk to the IRS.
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What are civil penalties, and how bad is it when the IRS applies them?
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Bad. Like, “this just got expensive” bad.
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Civil penalties are the IRS’s way of punishing you financially without involving a courtroom. They’re not criminal charges (nobody’s going to prison), but they can double or triple what you originally owed if you’re not careful.
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The most common ones:
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Failure-to-file penalty. 5% of your unpaid tax for every month your return is late, up to 25%. This is the big one. If you owe $10,000 and you’re five months late filing, that’s an extra $2,500 just for not turning in the paperwork.
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Failure-to-pay penalty. 0.5% per month on your unpaid balance, also up to 25%. Smaller than the filing penalty, which is why we always say file even if you can’t pay. Filing late is literally 10 times more expensive than paying late.
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Accuracy-related penalty. 20% of the underpayment if the IRS decides you were negligent or substantially understated your income. This one hurts because it’s applied on top of the tax you already owe plus interest.
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Penalties get their own interest charges. You’re paying interest on the tax, interest on the penalties, and penalties on the late payments. It compounds fast.
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The single best thing you can do is act before the IRS acts. File on time, even if you can’t pay. Set up a payment plan. Call them before they call you. The IRS penalizes avoidance much harder than it penalizes honesty.
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