IRS Debt over $25,000

If you owe over $25,000 to the IRS, you will be required to provide a complete financial statement. This form is called a 433A and asked a lot of questions about your assets and finances. If you own your home and have equity in it, the IRS will require that you apply for an equity loan up to the amount of your liability to pay off or pay down what you owe.

If you have money in an IRA or 401K, they will require you liquidate or borrow against it to pay off or pay down your liability.

If you have any ability to pay your liability down below 25,000, you will not have to provide the financial information or be required to secure payments as indicated above.

The 433A also asks for your income and expenses. Keep in mind that the IRS’ allowances for expenses may be a lot less than what you are actually spending. What your standard of living is, is up to you, unless you owe the IRS. Once you owe the IRS tax debt, you will be expected to adjust your living standards to what the IRS considers allowable. These amounts vary by area and can be found on the IRS website.

Negotiating and Installment Agreement when your liability is over 25,000 is complicated and you may decide you need an Enrolled Agent to represent you. Contacting an Enrolled Agent is not as expensive as hiring an attorney and they are admitted to practice before the IRS by taking a series of exams.