Owing over $100,000 in taxes can be terrifying. If you do nothing, the IRS will issue a federal tax lien, and your passport may be at risk if the agency certifies your debt as seriously delinquent. The IRS may also garnish your wages, seize your bank account, and start levying your assets.
Ignoring six-figure federal tax debt isn’t an option, but there’s a way forward to protect your assets and resolve the balance. The sooner you take action, the better.
At Damien’s Law, we’re committed to helping our clients find the best, personalized options for their tax problems. Contact us today to start the conversation. We can help you regardless of the size of your debt.
Key Takeaways for Taxpayers Who Owe Over $100,000:
- Growing debt: Interest updates quarterly, compounds daily, and rapidly increases balances.
- Asset seizure risk: The IRS will issue a federal tax lien and may levy (seize) bank accounts, wages, or personal and real assets.
- Passport risk: The IRS can certify your debt to the State Department, potentially putting your passport at risk.
- Revenue officer: Your case will likely be assigned to a revenue officer whose focus is to collect your debt.
- Required disclosure: You’ll need to complete a full financial disclosure (Form 433-A/F) to settle your debt or get into a payment plan/non-collectible status.
- Refund seizure: You won’t receive any tax refunds until the debt is paid off.
Consequences: What Happens If You Owe the IRS Over $100,000
The consequences for six-figure debt are aggressive and typically escalate rapidly once collection notices begin. You can expect to pay a significant amount in penalties and interest, face possible liens or levies on your assets, and potentially lose the freedom to travel internationally.
Penalties and Interest
Penalties and interest start accruing the day after the tax is due, snowballing into a huge balance.
- Failure-to-pay penalty: This penalty is 0.5% of the tax due per month (increasing to 1% monthly if you receive a Notice of Intent to Levy) and can increase up to 25% of the balance.
Example: If you owe $100,000, the monthly penalty will be $500 (0.5%) or $1,000 (1%) per month and will keep growing until you address it, but it maxes out at $25,000. - Failure-to-file penalty: This penalty is more severe, adding 5% to your unpaid taxes each month until maxing out at 25% of your balance. On a $100,000 tax debt, it’s $5000 per month.
- Compounding interest: Interest accrues on the original tax liability and on the penalties, and it compounds daily. The IRS updates its interest rate—generally the federal short-term rate plus 3%—quarterly.
Federal Tax Lien
A lien is the IRS’s legal claim to your assets. The IRS files a federal tax lien whenever someone owes the agency more than $10,000. You can often avoid a tax lien if you set up monthly payments proactively, but generally only if you owe less than $50,000. When you owe over $100,000, you’ll almost always face a tax lien.
Tax Levy and Asset Seizure
A tax levy is a direct seizure of property, and it becomes a major threat when you owe a serious tax debt. The IRS has the right to garnish your wages, take the funds in your bank accounts, and seize assets, including your home.
First, however, the agency must send you a Final Notice and Intent to Levy at least 30 days before the levy. This notice outlines your options and your right to appeal. To stop the levy, you must act by the deadline.
Passport Certification (Seriously Delinquent Debt)
You risk losing your passport if you owe over $100,000 and don’t make payment arrangements. Passports are at risk when taxpayers have unresolved “seriously delinquent tax debt.” The threshold is adjusted each year for inflation (it’s $66,000 for 2026), including penalties and interest.
The IRS doesn’t directly seize your passport; it certifies your seriously delinquent debt status to the State Department, which can revoke your existing passport and refuse to issue you a new one.
Entering into a qualifying agreement, such as an Installment Agreement (IA), Offer in Compromise (OIC), or Currently Not Collectible (CNC) status, will prevent this from happening. Once your passport has been revoked, however, you’ll have to work directly with the IRS to ensure that any payment arrangements you make will allow you to get your passport back.
Loss of Tax Refunds and Government Vendor Payments
Generally, the IRS will take your federal and state tax refunds if you owe tax debt. If you’re a government contractor, the agency can seize 100% of your vendor payments up to the amount of your tax debt plus interest and penalties.
Assignment to Revenue Officer
When you owe over $100,000, the IRS is more likely to assign your account to a revenue officer (RO). An RO’s job is to actively collect your debt, and they may:
- Visit your business.
- Request meetings and calls.
- Subpoena documents and obtain search warrants to find assets.
- Initiate levies and seizure actions.
While you can always request a managerial review if you disagree with an RO’s actions, their involvement signals that the IRS considers your debt a high priority.
How IRS Consequences Escalate as Debt Increases
| Balance Range | What Typically Happens | IRS Requirements |
|---|---|---|
| Up to $50,000 | Easier to get into a payment plan; can set up payments online; liens less likely if quick action is taken | Usually no financial disclosure required |
| $50,000 – $100,000 | Higher risk of liens and levies; automated enforcement begins; payments must be requested by phone or mail | Form 433-F may be required to set up payments |
| Over $100,000 | Revenue officer involvement common; passport at risk; levies highly likely if no action is taken | Full financial disclosure may be required, especially if the balance exceeds $250,000 |
What to Do If You Owe the IRS Over $100,000
Even with a six-figure tax debt, you have several options to avoid the most severe consequences, but you must take action immediately to protect your assets and halt enforcement.
Tax Debt Balance Reduction
Given the high penalties on a six-figure debt, reducing the overall balance is a great first step.
- Apply for penalty abatement. The more you owe, the higher the penalties. Applying for a first-time or reasonable cause abatement can significantly reduce your total liability.
- Dispute the tax liability. If you believe the IRS has the amount you owe incorrect, a tax attorney can help you dispute the liability.
- Consider a settlement. The IRS settles taxes for less than you owe through an OIC or Partial Payment Installment Agreement (PPIA).
Monthly Payment Plan (Installment Agreement)
If you can afford to pay off your back taxes in monthly installments within10 years or by the collection statute expiration date, the IRS will generally let you set up an installment agreement.
If you owe $100,000 or more, you cannot apply online. You must file Form 9465 (Installment Agreement Request) and potentially Form 433-F (Collection Information Statement). But you can also call the IRS with the info from these forms.
Two caveats: If you have defaulted on a payment plan in the last two years, the IRS may require a financial disclosure even if you owe under $50,000. The agency may also still issue a federal tax lien and take your tax refunds, so it’s wise to consult with a tax attorney to review your options.
Partial Payment Installment Agreement (PPIA)
With a PPIA, the monthly payment is based on your ability to pay. You make monthly payments until the tax debt expires on the collection statute expiration date (CSED), at which point the IRS waives the remaining balance.
A caveat: If you set up a PPIA, the IRS checks your financial situation every two years or so. If your finances improve, the IRS can demand full payment or higher monthly payments.
Offer in Compromise
An offer in compromise (OIC) is a request for the IRS to settle your tax bill for less than the full amount you owe. To qualify, you must prove one of the following:
- You can only afford to pay part of the balance.
- There’s doubt that you really owe the full balance (Doubt as to Liability).
- It would be inequitable/unfair to force you to pay (Effective Tax Administration).
The most common path is proving an inability to pay, which requires full disclosure of all assets and disposable income. If accepted, you must pay the offer in a lump sum or in payments over a 24-month period.
Currently Not Collectible
If you cannot afford to pay anything toward your tax debt, regardless of how much you owe, you can apply for currently not collectible (CNC) status. This status stops the IRS from pursuing collection actions against you.
While the IRS may still issue a federal tax lien, it won’t levy your assets or garnish your wages. The IRS reviews your situation periodically, and if your finances improve, they will require payment.
Bankruptcy
Filing for bankruptcy issues an automatic stay that temporarily stops all creditors—including the IRS—from taking collection actions against you. However, it’s difficult to discharge tax debt in bankruptcy – typically, only personally assessed taxes that are at least three years old qualify for discharge.
What If I Owe Less Than $100,000?
If you owe less than $100,000, the situation changes a bit. Consider the following.
- Owe under $66,000 – You’re under the threshold for losing your passport, but unfortunately, you can’t set up payments online. You must contact the IRS.
- Owe $50,000 or less – You can use the Online Payment Application to request a long-term installment agreement if you owe $50,000 or less. You’re also not at risk of potentially losing your passport.
- Owe $10,000 or less – The agency may issue tax liens to anyone owing $10,000 or more, and you may face enforced collections such as wage garnishment at this level of tax debt. Fortunately, if you owe $10,000 or less, you may qualify for a guaranteed installment agreement if you can pay off the debt in three years.
Frequently Asked Questions
What happens if I owe the IRS over $100,000 and do nothing?
If you owe over $100,000 and ignore the debt, the IRS will eventually progress to aggressive enforcement, which could include:
- Federal tax liens on all assets
- Assignment of a revenue officer
- Wage garnishments
- Bank account levies
- Certification of your debt to the State Department, putting your passport at risk
Can I get a payment plan if I owe more than $100,000?
Yes, but you cannot apply online. You must submit Form 9465 or call the IRS. You may also need to provide a full financial disclosure (Form 433-F/A) to negotiate an installment agreement with the IRS or a revenue officer.
Can I settle $100,000 of IRS debt for less than I owe?
Yes. The most common way to settle this level of debt for less than the full amount is through an offer in compromise (OIC) or partial payment installment agreement (PPIA). Approval depends on a calculation of your reasonable collection potential (i.e., your ability to pay).
Will I lose my passport if I owe over $100,000?
Only if you ignore the tax debt. Your passport may be subject to revocation or denial if the IRS certifies your debt as “seriously delinquent” to the State Department. Since $100,000 is well over the current threshold ($64,000 in 2025), your passport is at risk unless you enter into a qualifying resolution plan (IA, OIC, CNC).
Can I go to jail for owing over $100,000?
It’s rare to go to jail simply for being unable to pay your taxes (even six figures of debt). The IRS rarely pursues criminal charges unless you’ve committed tax fraud or evaded taxes (e.g., filing false returns, hiding income). If you’re simply behind and struggling to pay, jail time isn’t a major concern.
When should I hire a tax attorney for a six-figure IRS debt?
You should hire a tax attorney immediately. The stakes are too high at this debt level, with assets, wages, and travel documents at risk. An attorney can stop levies, negotiate with the revenue officer, prepare your mandatory financial disclosure, and determine the best resolution (OIC, IA, CNC).
Get Help With $100,000 in Back Taxes.
When you owe $100,000 or more in taxes, the IRS becomes serious about collecting the outstanding balance. The agency can use various aggressive strategies to collect back taxes, and if you don’t take action, you may face liens, levies, asset seizures, and other consequences.
At Damiens Law, we understand how stressful, scary, and frustrating this situation feels, and we can help you find a way out. When you contact us, we’ll discuss your tax situation and help you find a solution tailored to your needs. Don’t wait—contact us and get relief today.
