Settle My Tax — Stop IRS Wage Garnishments, Bank Levies & Settle Back Taxes via Offer in Compromise

Q: How does the IRS calculate my Offer in Compromise (Form 656) settlement amount?

Under IRC § 7122 and IRM 5.8.4, the IRS does not settle for an arbitrary percentage; it calculates your Reasonable Collection Potential (RCP) on Form 433-A (OIC). RCP equals your Net Realizable Equity in assets (typically 80% of fair market value minus secured loan balances) plus 12 months (for a 5-month Lump Sum Cash Offer) or 24 months (for a 24-month Periodic Payment Offer) of your Monthly Disposable Income after deducting IRS Collection Financial Standards for housing, utilities, food, transportation, and healthcare.

Q: What is the difference between IRS Notice CP504 and LT11 (or Letter 1058)?

Notice CP504 is a Notice of Intent to Seize (Levy) your state tax refund or other property, whereas Notice LT11 (or Letter 1058) is the formal Final Notice of Intent to Levy and Notice of Your Right to a Hearing under IRC § 6330. Receiving an LT11 or Letter 1058 triggers a strict 30-calendar-day window to file IRS Form 12153 (Request for a Collection Due Process or Equivalent Hearing), which legally suspends IRS levy action while Appeals reviews your resolution proposal.

Q: How quickly can a Circular 230 practitioner stop an active IRS bank levy or wage garnishment?

Once you sign IRS Form 2848 (Power of Attorney and Declaration of Representative), a licensed Enrolled Agent, CPA, or Tax Attorney can contact the IRS Practitioner Priority Service (PPS) or Automated Collection System (ACS), submit a verified financial statement (Form 433-F), and establish a qualifying Installment Agreement or Currently Not Collectible (CNC Status 53) hardship determination to secure a manual levy release (Form 668-D) within 24 to 48 hours.

Q: Who qualifies for the IRS Fresh Start Streamlined Installment Agreement (Form 9465)?

Under expanded IRS Fresh Start guidelines (IRM 5.14.5.2), individual taxpayers owing $50,000 or less in combined tax, penalties, and interest can qualify for a Streamlined Installment Agreement up to 72 months (or up to the 10-year Collection Statute Expiration Date) without submitting a full Form 433-A financial statement, and without a Notice of Federal Tax Lien (NFTL) filing if enrolled in Direct Debit.

Q: How do I qualify for IRS First-Time Penalty Abatement (FTA) using Form 843?

Under IRM 20.1.1.3.3.2.1, the IRS grants an administrative waiver of Failure-to-File (IRC § 6651(a)(1)), Failure-to-Pay (IRC § 6651(a)(2)), and Failure-to-Deposit (IRC § 6656) penalties for a single tax period if (1) you had no penalties assessed in the 3 prior tax years, (2) all required tax returns are filed, and (3) you have paid or arranged to pay any tax currently due.

Q: What is the 10-year IRS Collection Statute Expiration Date (CSED)?

Under IRC § 6502, the IRS generally has 10 years from the date a tax liability is formally assessed (the 23C assessment date on your IRS Account Transcript) to collect the tax by levy or court proceeding. Once the CSED expires, the remaining tax balance is legally extinguished, though certain actions (such as filing an Offer in Compromise or Collection Due Process appeal) toll (pause) the CSED clock while pending.

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Stop IRS Wage Garnishments, Bank Levies & Settle Back Taxes via Offer in Compromise in New York, NY

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Once we file Power of Attorney (IRS Form 2848), the IRS must speak directly to our licensed defense team instead of calling you or seizing your paycheck.

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Find out if you qualify for an Offer in Compromise (IRC § 7122), First-Time Penalty Abatement, or an affordable monthly payment plan.

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IRS Reasonable Collection Potential (RCP) & Fresh Start Resolution Comparison ($35,000 Tax Debt)

Under Internal Revenue Manual (IRM) 5.8.4, the IRS evaluates Offer in Compromise (Form 656) eligibility using your Reasonable Collection Potential: RCP = Net Realizable Equity in Assets (80% quick-sale value minus loans) + (Monthly Disposable Income after IRS National & Local Standards x 12 or 24 months):

Financial Metric	Status Quo	With Settle My Tax
Unresolved IRS Automated Collection (ACS)	CP504 / LT11 Notice + Continuous Wage Levy	✓ Form 2848 POA Stay + Collection Hold
72-Month Streamlined IA (IRC § 6159)	0.5%/mo Failure-to-Pay Penalty + 8% Interest	✓ $486 / mo Fixed (Penalty Rate Cut by 50%)
First-Time Penalty Abatement (IRM 20.1.1.3)	Up to 25% Failure-to-File + 25% Failure-to-Pay	✓ 100% Administrative Waiver of Eligible Penalties
Offer in Compromise (Form 656 / 433-A OIC)	$35,000 Full Balance + Compounding Interest	✓ Settled for Calculated RCP (If RCP < $35,000)

Frequently asked questions

How does the IRS calculate my Offer in Compromise (Form 656) settlement amount?

Under IRC § 7122 and IRM 5.8.4, the IRS does not settle for an arbitrary percentage; it calculates your Reasonable Collection Potential (RCP) on Form 433-A (OIC). RCP equals your Net Realizable Equity in assets (typically 80% of fair market value minus secured loan balances) plus 12 months (for a 5-month Lump Sum Cash Offer) or 24 months (for a 24-month Periodic Payment Offer) of your Monthly Disposable Income after deducting IRS Collection Financial Standards for housing, utilities, food, transportation, and healthcare.

What is the difference between IRS Notice CP504 and LT11 (or Letter 1058)?

Notice CP504 is a Notice of Intent to Seize (Levy) your state tax refund or other property, whereas Notice LT11 (or Letter 1058) is the formal Final Notice of Intent to Levy and Notice of Your Right to a Hearing under IRC § 6330. Receiving an LT11 or Letter 1058 triggers a strict 30-calendar-day window to file IRS Form 12153 (Request for a Collection Due Process or Equivalent Hearing), which legally suspends IRS levy action while Appeals reviews your resolution proposal.

How quickly can a Circular 230 practitioner stop an active IRS bank levy or wage garnishment?

Once you sign IRS Form 2848 (Power of Attorney and Declaration of Representative), a licensed Enrolled Agent, CPA, or Tax Attorney can contact the IRS Practitioner Priority Service (PPS) or Automated Collection System (ACS), submit a verified financial statement (Form 433-F), and establish a qualifying Installment Agreement or Currently Not Collectible (CNC Status 53) hardship determination to secure a manual levy release (Form 668-D) within 24 to 48 hours.

Who qualifies for the IRS Fresh Start Streamlined Installment Agreement (Form 9465)?

Under expanded IRS Fresh Start guidelines (IRM 5.14.5.2), individual taxpayers owing $50,000 or less in combined tax, penalties, and interest can qualify for a Streamlined Installment Agreement up to 72 months (or up to the 10-year Collection Statute Expiration Date) without submitting a full Form 433-A financial statement, and without a Notice of Federal Tax Lien (NFTL) filing if enrolled in Direct Debit.

How do I qualify for IRS First-Time Penalty Abatement (FTA) using Form 843?

Under IRM 20.1.1.3.3.2.1, the IRS grants an administrative waiver of Failure-to-File (IRC § 6651(a)(1)), Failure-to-Pay (IRC § 6651(a)(2)), and Failure-to-Deposit (IRC § 6656) penalties for a single tax period if (1) you had no penalties assessed in the 3 prior tax years, (2) all required tax returns are filed, and (3) you have paid or arranged to pay any tax currently due.

What is the 10-year IRS Collection Statute Expiration Date (CSED)?

Under IRC § 6502, the IRS generally has 10 years from the date a tax liability is formally assessed (the 23C assessment date on your IRS Account Transcript) to collect the tax by levy or court proceeding. Once the CSED expires, the remaining tax balance is legally extinguished, though certain actions (such as filing an Offer in Compromise or Collection Due Process appeal) toll (pause) the CSED clock while pending.

New York (NY) Consumer & Commercial Regulatory Protections

Settle My Tax operates in alignment with federal guidelines (Internal Revenue Code (IRC) § 7122 (Offer in Compromise), IRC § 6159 (Installment Agreements), IRC § 6330 (Collection Due Process), and Treasury Circular No. 230) and New York State Department of Financial Services (NY DFS) under the NY Consumer Credit Fairness Act (CPLR § 214-i 3-Year Limitation) & 23 NYCRR Part 600 (3-year written contract limitation period; 90% of gross wages exempt; no garnishment if disposable income < 30x NY minimum wage (CPLR § 5231)).

Settle My Tax Guides & Resources

IRS Fresh Start Initiative & Offer in Compromise (Form 656 / RCP Formula) Complete Guide →IRS Notice CP504 & LT11 Final Notice of Intent to Levy: 30-Day CDP Hearing & Levy Release →IRS Form 656 & Form 433-A (OIC) Reasonable Collection Potential (RCP) Mathematical Guide →IRS Streamlined Installment Agreement vs. Offer in Compromise (IRC § 7122) Comparison →IRS Notice Decoder: How to Respond to CP14, CP501, CP503, CP504, and LT11 / Letter 1058 →IRS First-Time Penalty Abatement (Form 843 / IRM 20.1.1.3.3.2.1) & Reasonable Cause Guide →How to Stop an Active IRS Wage Garnishment or Bank Levy Using Form 2848 & Form 12153 →

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