After working on an offer in compromise for a married client with over $100k in Federal tax outstanding, we are finally closing an offer in compromise (forms 433-A and 656) that has been discussed with the IRS agent as there are no assets to cover the liabilities and the taxpayers’ income is just to cover their basic living expenses, so the IRS understood that there is no potential collection other than whatever the offer in compromise shows.
Recently, the client got the CP508R notice – The IRS has reversed the certification of your tax debt as seriously delinquent, and notified the State Department of that reversal.
As a result, the taxpayer can renew his/her passport that could not do before as the IRS debt did not allow it.
No matter what the situation, the IRS allows several options to get back on track with your taxes such as installment agreements, offer in compromise, etc. and there is the ten year statute of limitation on IRS debt. Additionally, there are other options, such as Bankruptcy filings as some liabilities might be discharged in a bankruptcy.
Link – Understand notice CP508R