Frequently Asked Questions

The failure-to-pay penalty is 0.5% per month, up to a maximum of 25% of the unpaid tax. If the IRS has issued a final notice and the balance is still unpaid, the rate increases to 1% per month. Interest accrues daily at the federal short-term rate plus 3% — currently around 8% annually. Combined, a $10,000 balance can grow to $14,000–$15,000 over 5 years without any resolution action. This is why acting sooner is always better.

The IRS has 10 years from the date of assessment to collect a tax debt. This is the Collection Statute Expiration Date (CSED). After 10 years, the balance is removed from your account permanently. However, certain actions pause (toll) the statute — submitting an OIC, filing bankruptcy, requesting a Collection Due Process hearing, or being outside the U.S. for 6+ months. Many taxpayers in CNC status see portions of their debt expire when the CSED passes.

The IRS doesn't report to credit bureaus. However, if the IRS files a Notice of Federal Tax Lien, it becomes a public record — and before 2017, credit bureaus routinely included tax liens in credit reports. Since 2017, the bureaus removed most tax lien data from credit reports. Older liens already on your report may still appear. The most direct credit impact is from an NFTL limiting your ability to borrow, refinance, or open business accounts.

Yes, but in practice it's rare. The IRS can and does seize real property in cases of substantial, willful non-payment — typically balances over $100,000 with no cooperation from the taxpayer. Seizure requires additional IRS approvals beyond what's needed for bank levies or wage garnishment. The far more common scenario: the IRS files a lien (which encumbers the property) but doesn't seize it unless the taxpayer refuses to cooperate with any resolution.

There's no fixed percentage — it depends entirely on your Reasonable Collection Potential (RCP). For an Offer in Compromise to be approved, the IRS accepts an amount equal to your RCP: net asset equity plus projected future income. Some clients settle $100,000+ debts for under $5,000. Others with similar balances and better finances end up settling for $40,000–$60,000. The outcome depends on your specific financial profile, not a generic formula.

Yes — but it's often misrepresented. The Fresh Start Initiative is a set of IRS policy changes made between 2011–2012 that expanded OIC eligibility (by changing how future income is calculated), raised the lien filing threshold to $10,000, created lien withdrawal rights for DDIA participants with balances ≤$25,000, and extended streamlined installment agreement terms. It's not a separate program you 'apply for' — it's the framework under which all IRS resolution programs operate.

The IRS pre-qualification tool (irs.gov/payments/offer-in-compromise) gives a rough estimate, but TaxWave's full analysis is far more accurate. The key calculation: your net asset equity (home, car, bank accounts, retirement accounts at a discount) + future monthly disposable income × 12 or 24 months (depending on offer type). If that number is below your total balance, you qualify in principle. TaxWave runs this calculation as part of every free consultation.

Yes — penalty abatement is legitimate and effective. The IRS has three penalty relief programs: (1) First-Time Abatement (FTA) — automatic removal for taxpayers with a clean 3-year prior history; (2) Reasonable Cause — removal based on documented hardship; (3) Statutory exceptions (disaster, IRS error). Penalties can represent 20–25% of a total balance. TaxWave pursues abatement in almost every case as part of the overall resolution strategy.

TaxWave handles the full resolution process: (1) We obtain your IRS transcripts to understand the complete picture — what's assessed, what penalties exist, what enforcement is pending. (2) We file Power of Attorney so the IRS contacts us, not you. (3) We prepare all required financial disclosures and forms. (4) We negotiate directly with IRS Collections, Appeals, and Examination. (5) We monitor post-resolution compliance to protect your agreements. You don't talk to the IRS — we do.

Fees vary based on the complexity of the case and the programs pursued. A simple First-Time Abatement or installment agreement setup is typically lower cost. A full OIC case — with financial disclosure, negotiation, and potential appeals — is more involved and priced accordingly. TaxWave provides a specific fee quote after the initial consultation, once we understand the scope of your case. We don't charge large upfront fees before understanding your situation.

No. TaxWave represents taxpayers nationally. Federal tax resolution (IRS matters) is conducted remotely — your representative communicates with the IRS directly, and the entire process can be handled by phone, email, and digital document signing. TaxWave has clients in every state.

An OIC rejection is not the end of the road. TaxWave files an appeal with the IRS Office of Appeals within the 30-day window. If the appeal also fails, we pivot to the next-best strategy — typically a Partial Pay Installment Agreement (PPIA), which achieves similar economic outcomes over a longer timeline. In some cases, the appeal process itself results in a modified acceptance.