Your IRS Action Plan

Your options, laid out clearly — so you can choose the path that fits and file it yourself.

What's inside

Where you stand
What the IRS is likely to do next
Your options, compared
Your numbers — what the IRS may accept to settle
How to file it yourself, step by step
What to expect
When to bring in a professional
The IRS sources behind this plan

1 · Where you stand

You owe approximately $25,000–$50,000 for 2022, 2023. You also have a return that isn't filed yet (2023) — in most cases that has to be fixed first, because the IRS needs accurate returns on file before it will approve a payment plan or settlement.

2 · What the IRS is likely to do next

Time-sensitive

You received a CP504. That's a Notice of Intent to Levy: it lets the IRS take your state tax refund and signals escalation, but it is not the final notice. The notice that starts a 30-day clock — and that lets the IRS levy your wages or bank account — is the Final Notice (LT11 / Letter 1058). The most important thing now is to respond before that final notice arrives.
Verify the exact notice and dates against the letter you received.

IRS sources: CP504 notice · LT11 / Letter 1058 · Form 12153 (CDP hearing)

3 · Your options, compared

These are the IRS's own, official programs that fit your situation. Here's how each works so you can decide.

Payment Plan (Installment Agreement)

often the most reliable

How it works: Pay what you owe over time in fixed monthly amounts.
Who it's for: Most people — under $50,000 you can usually apply online (streamlined, up to 72 months, no financial statement).
Cost: Setup fee $22 (direct-debit, online) or $69 (non-direct-debit); $0 if low-income with direct debit. Interest + a reduced failure-to-pay penalty still accrue.
Tradeoffs: You pay in full over time, but it stops collection escalation immediately.
Forms: Online application, or Form 9465

IRS sources: Payment Plans · Form 9465 · Online Payment Agreement

Offer in Compromise (settle for less)

possible for you

How it works: Settle for less than the full amount if you can show you can't realistically pay it.
Who it's for: People with limited income/assets relative to the debt.
Odds: The IRS accepts only about 1 in 5 offers (FY2024, and the rate has been falling) — so it has to be done right. Try the free IRS Pre-Qualifier first.
Cost: $205 application fee + 20% down (both waived if low-income).
Forms: Form 656 + Form 433-A (OIC)

IRS sources: Offer in Compromise · Form 656 · Form 433-A (OIC) · OIC Pre-Qualifier (free)

Penalty Relief (First-Time Abatement)

How it works: Penalties may be removed if your prior 3 years were clean, all current returns are filed, and you've paid or arranged to pay. Often handled by phone.

IRS sources: First-Time Abate · Form 843

4 · Your numbers

Estimated Reasonable Collection Potential (what the IRS may accept to settle)

$18,400

≈ your asset equity ($6,000) + monthly disposable income ($1,033) × 12, the way the IRS computes it on Form 433-A (OIC). An estimate, not a determination — the official IRS calculation and your specifics control.

IRS sources: Form 433-A (OIC) · Collection Financial Standards

5 · How to file it yourself

Steps for the path most likely to fit you here (Payment Plan, after filing the missing 2023 return):

File your missing 2023 return first (do it yourself, or with a licensed preparer) so the IRS has an accurate balance — a plan can't be approved on an incomplete account.
Confirm your total balance and that all other returns are filed at IRS.gov (your online account shows balances and notices).
Apply for a streamlined Installment Agreement online (under $50,000), choosing direct debit to lower the setup fee — or mail Form 9465.
If your income and assets are low relative to the debt, run the free IRS OIC Pre-Qualifier before committing to a plan, in case settling is realistic for you.

6 · What to expect

Timeline: Online Installment Agreements are often approved immediately; a mailed Form 9465 can take several weeks. Filing the missing return should come first.

Likely IRS response: For a streamlined plan under $50,000, approval is routine when returns are filed and the monthly amount clears the balance within the allowed term.

Common reasons applications get rejected (avoid these): missing/unfiled returns, a monthly payment too low to pay off the balance in time, math errors on the financial forms, or applying for an OIC that the numbers don't support.

7 · When to bring in a professional

Consider a licensed Enrolled Agent, CPA, or tax attorney if: you can't file the missing returns yourself, the IRS has already issued a levy or lien, you want someone to deal with the IRS on your behalf, or your situation involves a business, payroll taxes, or significant assets. (Promoza's done-for-you service, with a licensed Enrolled Agent, is launching soon — reply to your email to reserve a spot.)

8 · The IRS sources behind this plan

Nothing here is our opinion — it's the IRS's own published rules, applied to your situation. Verify any of it yourself:

This Action Plan provides self-help information and decision-support to help you understand IRS collection options and prepare to file your own forms. Promoza Tax is not a law firm or a tax-representation service, and this is not legal or tax advice. Any estimates are illustrative; your specific circumstances and official IRS forms and calculations control. The IRS accepts only a minority of Offers in Compromise, and no outcome is guaranteed. For representation before the IRS, consult a licensed Enrolled Agent, CPA, or attorney.