What Distinguishes a “Seriously Delinquent” IRS Tax Debt Notice

You may have recently received an IRS notice that you have a “seriously delinquent” IRS tax debt. What distinguishes a “seriously delinquent” debt? It must meet several requirements, including the amount of the debt and the exhaustion of taxpayer remedies, such as a hearing.

The Unpaid Amount Must Be at Least $55,000.00

A seriously delinquent tax debt is an unpaid and enforceable debt of at least $55,000 (in 2023), including interest and penalties. Keep in mind that interest and penalties can surpass the amount of the original debt.

A Federal Tax Lien Has Been Filed and All Remedies Exhausted

To meet the standards of a “seriously delinquent” debt, a federal tax lien must have been filed, and the time for any taxpayer hearings or appeals must have lapsed. A federal tax lien is a public notice to creditors that the IRS has asserted a legal right to your property. After a tax lien has been filed, you have a right to appeal.

Distinction Between a Tax Lien and a Tax Levy

A tax lien is a notice and assertion that the IRS has a right to your property. A tax lien does not, in and of itself, give the IRS the right to take property but is a step in the process. Only a tax levy allows the IRS to take your bank account or other property or to seize and sell real estate —it is an extremely broad power.

Avoiding a Tax Levy

If you receive a notice of serious delinquency, or a tax lien or levy, it is possible to avoid the loss of your property and funds. A debt is no longer considered seriously delinquent after the following:

1. The taxpayer pays the debt or enters into an installment agreement with the IRS.
2. The IRS compromises or cancels the debt owed due to hardship or other issues.
3. The IRS waives fees or interest penalties, lowering the debt.
4. One spouse makes a request for Innocent Spouse relief.

If you are having trouble paying a seriously delinquent tax debt, you may need assistance in negotiation with the IRS. The tax pros at Highland Tax Resolution are here to help resolve all types of tax issues, including seriously delinquent tax debt.