Realizing you owe more tax than you can pay is a genuinely unsettling moment. The notices are stern, the numbers feel out of reach, and it’s hard to know what to actually do first. The good news is that resolving tax debt follows a knowable sequence—and taking it one step at a time turns an overwhelming problem into a series of manageable moves. That’s especially worth knowing in Virginia, where the state collector moves harder than most.
Here’s a first-steps guide for Richmond taxpayers who owe the IRS, the Virginia Department of Taxation, or both. If you’d like professional help, you can find how to visit the Richmond office of a dedicated tax practice. Either way, the sequence below works.
Open and sort the mail
The instinct to leave tax notices unopened is understandable and exactly wrong, because every notice carries a deadline. Open everything and sort it: which notices are from the IRS, which from Virginia Tax, what years they cover, and how much each claims. Because Virginia has a state income tax, many Richmond taxpayers owe both agencies, so knowing exactly what you face is the foundation for everything that follows.
Know which agency
The two authorities behave very differently, and Virginia is the aggressive one. The IRS administers federal income tax through a large, notice-driven system that moves through a defined sequence before it enforces. Virginia Tax administers the state income tax and collects with unusual force—it can garnish up to 100% of net wages (versus the 25% cap that binds ordinary creditors), file memoranda of lien that last as long as 20 years, and seize bank and investment-account funds. That power makes prompt attention to a Virginia notice especially important.
Pick your resolution
With the picture clear, choose the option that fits your finances. On the federal side, the IRS’s payment-options guidance lays out the choices:
- An installment agreement if you can pay over time.
- An offer in compromise if paying in full would cause genuine hardship—real but rigorous, per the IRS’s offer-in-compromise page.
- Currently Not Collectible status if you can’t pay anything right now.
- Penalty abatement to trim penalties where there was reasonable cause.
Virginia offers its own parallel options through the Virginia Department of Taxation: a payment plan (for balances under $25,000, typically 12 months, up to 24 with proof of hardship), an offer in compromise to settle for less than owed, and hardship relief.
Mind Virginia’s collection power
This is where Virginia punishes delay especially hard. Because the state can take up to 100% of net wages and its liens can persist for two decades, an unresolved balance can do outsized damage the longer it sits. Address the fastest-moving threat first—a federal Final Notice of Intent to Levy or a Virginia collection notice—because reversing an active garnishment or lien is far harder than preventing one. And since the two agencies collect independently, resolve them on coordinated tracks so neither escalates while you focus on the other.
Get help when it counts
A small balance with a straightforward payment plan can often be handled directly. But strongly consider representation when the balance is large, when enforcement has started, when you have unfiled returns or multiple years, when both agencies are involved, or when you can’t realistically negotiate while running your life. In those situations—and given Virginia’s aggressive collection—the gap between a self-managed outcome and a professionally negotiated one usually exceeds the cost of the help.
If you do hire someone, vet them: a licensed attorney you can verify with the Virginia State Bar, a written plan and fee agreement, honest expectations rather than guarantees, and a real attorney handling your case rather than a call-center pipeline.
The step that comes before all others
Before any of this works, you must be current on filing—even if you can’t pay. Neither the IRS nor Virginia Tax will consider most relief while returns are outstanding, and filing missing returns also replaces the inflated estimated assessments the agencies build from wage data alone. Filing is always step zero.
Common missteps here
The sequence above works, but a handful of mistakes derail it—and in Virginia they’re costly. Don’t assume a state notice is less urgent than a federal one; Virginia Tax can move to a wage lien that reaches up to 100% of your net pay, so a state notice may be the more dangerous of the two. Don’t drain a retirement account or take on high-interest debt to clear a balance before exploring the structured options, which are usually cheaper.
Don’t ignore a memorandum of lien on the assumption it’s harmless—it clouds your property and can persist for 20 years. And don’t hand a large upfront fee to a “pennies on the dollar” outfit that guarantees a result before reviewing your finances. Sidestepping these keeps the plan on track.
Your way through it
Owing the IRS or the Virginia Department of Taxation is stressful, but it yields to a plan. Open everything, file what’s missing, identify which agency you’re dealing with, choose the resolution that fits, act before Virginia’s powerful collection tools engage, and get help sized to the stakes.
Richmond taxpayers who follow that sequence almost always land on far better terms than the notices imply. The worst move is silence, which lets both collectors run their timelines—and in Virginia, those timelines run long and hit hard. The best is a calm, prompt first step, starting with opening the mail.
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