The IRS recently released a Tax Debt Help tool. Its purpose? To help taxpayers find a solution for their tax debt. Unfortunately, while that sounds like a great idea in theory, it falls short in many real-world applications.
If you want the best relief option and the strongest resolution strategy for your situation, you need to work with a tax attorney. Contact us at Wiggam Law today to learn how we apply custom strategies to every tax case with our IRS negotiation services.
Key takeaways
- The IRS created a Tax Debt Help tool to help taxpayers learn about resolution options.
- It tells you which resolutions apply in various situations – but doesn’t customize the recommendations to your situation.
- Use the Tax Debt Help tool for research and then reach out to a licensed tax professional for guidance.
IRS Tax Debt Help tool – what is it?
This is an interactive tool the IRS designed to help taxpayers learn about resolution options so they can plan their next steps. It walks taxpayers through a very short series of questions, and then provides them with the most likely resolution for their situation with links to more details and application forms.
Why did the IRS release this resolution tool?
The tool is part of the IRS’s plan to embrace digital technology. IRS CEO Frank J. Bisignano said it’s all about “making tax compliance clearer, more accessible, and less intimidating for taxpayers.”
The IRS’s news release says that, “By expanding self-service options, the IRS is helping taxpayers resolve issues faster while reducing the need for phone calls or in-person visits.” Ironically, however, the majority of solutions proposed by the tool tell taxpayers to call the IRS to apply or to get more information.
Who can benefit from the IRS Tax Debt Help tool?
The IRS says this tool can help, but who should really use it? Consider checking it out if you:
- want to learn about the options before you reach out to a tax professional.
- owe under $50,000 in individual tax debt and can pay it off by the expiration date.
- owe under $25,000 in business trust fund tax debt (or under $50,000 in non-trust fund tax debt) and can easily pay it off by the expiration date.
- have very limited assets and no disposable income, and your expenses are all under the IRS’s collection financial standards.
- are experiencing financial hardship, including a terminal illness or excessive medical bills, incarceration, unemployment (with no income), or your only source of income is Social Security, welfare, or unemployment.
With these situations, the tool will show you a resolution option and how to apply – and that advice is most likely applicable to your situation. If your situation is more complicated, you should reach out to a professional for customized tax advice or learn more about how the tool works and its limitations before trusting it for advice.
Stop! The Tax Debt Help tool is (probably) not right for you
Good intentions aside, this IRS debt resolution tool has serious limitations, and if you’re dealing with any of the following, you need a more advanced strategy – and in most cases, that requires working with a tax professional:
The Tax Debt Help Tool is probably not right for you if you’re dealing with:
Active collections – If you’re currently facing pending or active wage garnishments, bank levies, or asset seizures, this tool will not give you tips on what to do. It does not address those threats directly. In contrast, a tax attorney’s first question is often, “Is the IRS enforcing involuntary collections?”
Final Intent to Levy notice – Once you receive this final notice, the IRS can (and will) start seizing your assets in 30 days unless you appeal or make payment arrangements. If you apply for the resolution option recommended by the tool, that will stop IRS collections as long as it’s before the deadline on the notice.
Unfortunately, however, the recommended options may not be the best solution for your situation, and the tool doesn’t specifically address how to deal with this notice.
Tax debt close to the collection expiration date – The IRS only has 10 years to collect tax debts, and a looming expiration date has a significant effect on which resolution option you should choose for your situation. The Tax Debt Help tool doesn’t take that into account, and unfortunately, that can mean agreeing to payments when you could qualify for a settlement or paying a settlement when you would have been better off waiting out the clock.
Multiple types of tax debt – Using the tool, you’ll get an overview of the IRS’s debt resolution options, but you won’t get any insights on what to do if you also owe state tax debt or multiple types of federal tax debt (for example, individual income tax and payroll tax). These situations require smart strategies if you want to protect yourself from liens, personal liability for business tax debt, and other risks.
Taxes due to a spouse or ex-spouse – If you indicate that you owe tax debt due to your spouse or ex-spouse, this IRS tool instructs you to look into innocent spouse relief, but it doesn’t tell you how complicated the application process is.
According to the U.S. Treasury Inspector General for Tax Administration (TITGA), the IRS denies 48% of innocent spouse requests and applies partial relief for 13%, meaning fewer than 40% of applicants get full relief through this program. But the tool just tells you to apply, as if it’s an easy process.
What to expect with the IRS Tax Debt Help tool
Here’s a rundown of how the tool works, what it asks, and why it provides the answers it does, along with a look at the potential problems in each section.
Basic eligibility questions
The first two questions are to confirm your basic eligibility for IRS relief options, and they include:
Are you in bankruptcy? If you say no, it will let you proceed. If you say yes, the tool will tell you to call the IRS to talk about options. Why? Because you can’t apply for payment plans, settlements, or other IRS relief programs while you’re in an open bankruptcy proceeding. Unfortunately, the tool doesn’t tell you that; it just urges you to call for options.
Do you have unfiled returns? If you say no, it will let you move forward, but if you say yes, it will stop you and direct you to the IRS’s page on unfiled returns. Unfortunately, that page doesn’t tell you how many years you need to file.
Typically, to apply for IRS relief options, you only need to file the last six years of returns – which means the current year and the previous five. If you take the IRS’s advice at face value, you may end up filing more years than needed and incurring unnecessary tax debt.
The problem? The Tax Debt Help tool only asks about these two eligibility questions, but IRS relief programs have additional requirements. In particular, you must be up to date with estimated quarterly payments and payroll deposits if applicable. If not, the IRS will not let you set up payments or apply for a settlement. None of that is covered.
Type of tax debt
Next up, the tool asks what type of tax debt you owe – individual or business. Your answer here determines what appears next for levels of tax debt and ultimately affects the recommended resolution options.
The problem? The tool tells you to select “individual” if your business is a sole proprietorship, but that will lead you to the wrong solutions if you’re a sole proprietor who owes payroll taxes. It also doesn’t ask if your business is still operating, which can impact your payment options.
How much you owe
If you selected individual tax debt, the tool will ask if you owe more or less than $50,000, and if you’re looking for answers on business tax debt, it will ask you to pick one of these four options:
- Less than $25,000 in any trust fund taxes
- $25,000 or more in trust fund taxes
- Less than $50,000 (with no trust fund taxes)
- $50,000 or more (with no trust fund taxes)
The way you answer this section only affects the payment plan options the tool provides. It doesn’t affect any other resolution options.
The problem? It provides you with payment options based solely on how much you owe and the type of tax. It doesn’t screen for any criteria that may prevent you from getting approved for a payment plan, such as defaulting on a recent payment plan. It also doesn’t ask when your tax debt expires or explain how that affects your options.
Your situation and how much you can pay
After you specify your debt level, the tool asks you to select a statement that best describes your situation. Then, it provides you with a stock resolution recommendation based on your answer.
Here are the choices, along with the resolution option the Tax Debt Help tool autopopulates as a recommendation:
| Your Situation | Tax Debt Help Tool Recommendation |
|---|---|
| I can make a payment now | Pay in full. Or pay what you can and consider other resolution options. |
| I can pay over time | Short or long-term payment plans with different requirements based on debt level. |
| I can’t pay anything now | Temporary collection delay due to financial hardship. |
| I don’t agree with the amount I owe | Call the IRS or consider an appeal. |
| I want to settle for less than I owe | Consider an offer in compromise. |
The problem? There are many problems with this approach. Namely, the tool only considers the most basic criteria. If you want to settle, for example, it tells you to look into an offer in compromise, but it doesn’t provide any additional details or context. It provides one-size-fits-all advice, which doesn’t apply to every situation.
Additionally, the IRS’s Tax Debt Help tool doesn’t take into account:
- How the age of your tax debt affects the optimal strategy in your situation.
- Situations where you may qualify for hardship or a settlement instead of payments.
- That the IRS rarely grants CNC status or offers in compromise to in-operation businesses.
- The complexity of the application process and the high risk of rejection for offers in compromise.
- IRS appeals are complicated with strict procedural requirements and deadlines.
- What the IRS considers about your business finances if you apply for payments on over $25,000 in trust fund taxes.
Additional considerations
Finally, the tool asks one question to wrap everything up, and you can choose up to three answers. The options vary slightly for individuals and businesses, but in both cases, the tool autopopulates recommendations as follows.
| Your Statement | Tax Debt Tool Recommendation |
|---|---|
| I have unpaid penalties due to circumstances beyond my control. | Penalty relief – call the IRS or read more on the IRS website. |
| I was affected by a disaster, emergency, military deployment, or identity theft. | Check if you qualify for an extension with links to each of these scenarios. |
| I have tax debt related to my spouse or ex-spouse that I disagree with. | Check if you qualify for innocent spouse relief with links to more info. |
| None of these apply to me. | No recommendations are populated. |
The problem? At first blush, these recommendations are exactly what you should look into, but penalty abatement and innocent spouse relief, in particular, are not always that straightforward. If you apply for either and get rejected, you can appeal, but if the IRS denies your appeal, that’s the end of the line unless you proceed to the United States Tax Court or Federal Court, which can be costly and requires an attorney.
You don’t get another chance to apply for either of these options for the same tax liability for the same tax year. Both innocent spouse relief and penalty abatement for reasonable cause and statutory relief require compelling arguments based on strong knowledge of the tax code.
Unfortunately, if you apply for these programs on your own, you may put yourself at risk of losing out on these relief opportunities.
When to contact a tax professional
Now, you understand the basics of how this tool works, when it can be useful, and why you should use it cautiously. But when should you close your browser and call a professional?
Schedule a consultation if you:
- Owe over $50,000 in individual tax debt
- Owe over $25,000 in trust fund tax debt or over $50,000 in non-trust fund business taxes
- Have a revenue officer assigned to your case
- Want a customized strategy tailored to your situation
- Need help dealing with multiple types of tax debt
- Want to apply for a relief – without the risk of losing out on options due to rejections.
- Are dealing with a situation not covered by the tool, such as seeking refunds for COVID-era interest or penalties.
- Are not sure what to do next.
A tax professional provides you with insights and guidance that you can never get from this type of DIY tool. Unfortunately, it’s not even a calculator. It’s effectively an accordion menu that reveals or hides different options on the page based on your answers.
FAQ about the IRS Tax Debt Help tool
When did the IRS make the Tax Debt Help tool?
The IRS released this tool in April 2026.
Will the IRS know I owe money if I use the tool?
No, the tool is designed to be used anonymously. You do not have to enter any identifying information.
Is the Tax Debt Help tool useful for taxpayers who owe the IRS?
The tool can help you learn more about potential options, but it has several limitations, so you need to take its advice carefully and, whenever possible, reach out to a professional.
Does the Tax Debt Help tool run on AI?
No, this tool is very simple. It does not run on AI. In fact, while AI is probably not a great option for tax advice, it may be more effective than this tool.
Should I call a professional or use the IRS’s Tax Debt Help tool?
Consider using the tool to learn about options, but then, rely on a professional for custom advice and guidance for your specific situation.
Contact a Tax Attorney for Personalized Resolution Services
At Wiggam Law, our focus is on helping taxpayers deal with IRS collection cases and all other disputes. Whether you’re behind on payments or facing an audit on a complex tax deduction, our attorneys can help. Contact us today – we’ll start with a confidential case evaluation and then go from there.
Resources
https://www.irs.gov/newsroom/irs-launches-new-online-tool-to-help-taxpayers-resolve-tax-debt
https://www.irs.gov/payments/get-help-with-tax-debt
https://taxpolicycenter.org/taxvox/irs-modernization-requires-fundamental-digital-transformation
https://www.taxnotes.com/research/federal/internal-revenue-manual/5.16.1
https://www.irs.gov/irm/part5/irm_05-016-001r#idm140621736421600
https://www.irs.gov/newsroom/irs-launches-paperless-processing-initiative
