Resolve IRS Debt Without Filing Bankruptcy

You Don’t Have to File Bankruptcy to Get IRS Relief

When you're drowning in back taxes, it might feel like bankruptcy is your only option. But in most cases, the IRS offers powerful alternatives that can resolve your tax debt without the long-term damage bankruptcy can cause.

In this post, we’ll show you exactly how to negotiate with the IRS, stop collections, and settle your tax bill—without ever filing for bankruptcy.

Why Avoid Bankruptcy?

While Chapter 7 or Chapter 13 bankruptcy can sometimes discharge tax debt, it’s rarely the best first move. That’s because:

• Not all IRS debt is dischargeable
• Bankruptcy stays on your credit report for 7–10 years
• Legal fees and court costs can be high
• It can pause—but not eliminate—collections in many cases

Instead, most taxpayers can qualify for better, less damaging resolution methods.

Option 1: Settle for Less with an Offer in Compromise

The IRS Offer in Compromise (OIC) program allows you to settle your tax debt for less than the full amount owed if:

• You can’t afford to pay in full
• You’re in compliance with recent tax filings
• You submit a detailed financial disclosure

The IRS uses a formula called Reasonable Collection Potential to calculate your offer amount.

Related: IRS Offer in Compromise – How to Settle for Less Than You Owe

Option 2: Stop Collections with Currently Not Collectible (CNC) Status

If you’re facing financial hardship and can’t make any payments, you may qualify for Currently Not Collectible status. This temporarily stops:

• Wage garnishments
• Bank levies
• IRS collection letters

It doesn’t erase your debt—but it pauses enforcement while you regain stability.

Related: How to Qualify for IRS Hardship Status (Currently Not Collectible)

Option 3: Affordable Monthly Payments with an Installment Agreement

If you don’t qualify for an OIC or CNC, the IRS often accepts Installment Agreements that let you pay off your tax debt over time—even at reduced amounts for certain cases.

You may be eligible for:

• Streamlined agreements with no financial disclosure
• Partial pay agreements based on ability to pay
• Flexible plans with lower monthly payments

Related: How to Set Up a Payment Plan with the IRS (Installment Agreement Guide)

Option 4: Penalty Abatement

The IRS charges steep penalties for failure to file, failure to pay, and underpayment. But if you have a legitimate reason—such as illness, natural disaster, or reliance on bad advice—you may qualify for penalty abatement.

This doesn’t erase the tax, but it can reduce what you owe dramatically.

Related: Why the IRS Rejected Your Offer in Compromise

Option 5: Wait Out the IRS Collection Statute

In some cases, if you’re nearing the 10-year Collection Statute Expiration Date (CSED), it may make sense to protect your income and let the clock run out.

But be careful—certain actions like filing an Offer or entering bankruptcy toll the statute and give the IRS more time to collect.

Related: The IRS 10-Year Collection Statute – CSED Rules Explained

Why Work with a Tax Resolution Firm?

At Boulanger CPA and Consulting PC, we help taxpayers in Orange County:

• Avoid bankruptcy by negotiating better IRS outcomes
• Stop levies and garnishments
• File Offers in Compromise and CNC applications
• Review transcripts to calculate CSED expiration

Call  (657) 218-5700 or schedule a confidential consult at  www.orangecounty.cpa

Virtual appointments and fast relief available.

Frequently Asked Questions

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.

With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.

Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.

Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.