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Tax debt doesn’t just go away. It grows, it compounds, and it can take over your life faster than you might think. If you’re dealing with unpaid taxes to the IRS or the Minnesota Department of Revenue, you already know the stress that comes with every letter, every phone call, every sleepless night wondering what happens next.
We’re Kain + Henehan, and we help people in St. Cloud and across Minnesota get out from under crushing tax debt. We’ve seen how quickly a manageable tax bill can spiral into something that feels impossible to escape. But here’s what we want you to know: there are real solutions, and you don’t have to face this alone.
Tax debt is different from other kinds of debt. Credit card companies can’t garnish your wages without a court order. The IRS can. The Minnesota Department of Revenue can freeze your bank account, put a lien on your house, and take money directly from your paycheck. They have powers that other creditors simply don’t have.
When you owe taxes, the government doesn’t forget. They don’t negotiate the way a credit card company might. They have systems in place designed to collect what you owe, and those systems move forward whether you’re ready or not.
Maybe you filed your taxes but couldn’t pay what you owed. Maybe you didn’t file at all because you knew you couldn’t pay. Maybe you made a mistake on your return, or your business had a bad year, or you went through a divorce or medical crisis that derailed everything. Whatever brought you here, you’re not alone, and there are ways forward.
Bill Kain and Margaret Henehan have over 60 years of combined bankruptcy experience and have helped hundreds of Minnesotans get back on their feet after getting weighed down by debt.
At Kain + Henehan, we love people. We never view your story as a source of shame or embarrassment. We truly care about our clients and want to help them live their best lives.
Bill and Margaret are respected among their peers and colleagues. Their positive relationships within the bankruptcy court system leads to positive outcomes for their clients.
When you file for Chapter 13 bankruptcy, you submit a proposed repayment plan along with financial documentation, including income, expenses, assets, and debts. The plan will:
Tax debt grows in ways that catch people off guard. It’s not just the amount you originally owed. The IRS and Minnesota add penalties and interest that can double or even triple your debt over time.
Here’s how it happens:
A $10,000 tax debt can become $15,000 or $20,000 in just a couple of years if you don’t address it. The longer you wait, the harder it gets.
We step in between you and the tax authorities. Once we’re representing you, we handle the communications, the paperwork, the negotiations. You don’t have to face the IRS or Minnesota Revenue alone anymore.
We look at your entire financial situation and figure out what relief options you actually qualify for. Not every solution works for every person. We don’t push you toward a one-size-fits-all answer. We find what works for your specific circumstances.
We also stop the immediate threats. If you’re facing wage garnishment or a bank levy, we can often get those actions paused while we work out a solution. That breathing room matters.
You might owe the IRS, the state of Minnesota, or both. They’re separate systems with separate rules, but they often work together.
Federal tax debt comes from your income taxes, self-employment taxes, payroll taxes if you own a business, or penalties from retirement account withdrawals. The IRS has nationwide reach and significant collection powers.
Minnesota state tax debt comes from your state income taxes, sales taxes if you run a business, or other state-specific taxes. The Minnesota Department of Revenue has many of the same collection powers as the IRS within Minnesota’s borders.
Both agencies can garnish wages, levy bank accounts, and file liens. Both charge penalties and interest. And both need to be dealt with if you owe them money.
People end up with tax debt for all kinds of reasons:
None of these make you a bad person. They make you human. And they’re all situations we can help you work through.
Offer in Compromise
An Offer in Compromise lets you settle your tax debt for less than you owe. It sounds too good to be true, but it’s a real program that the IRS and Minnesota both offer.
The catch is that you have to prove you can’t pay the full amount. The IRS looks at your income, your expenses, your assets, and your future earning potential. If they determine that collecting the full amount would create genuine financial hardship, they might accept a lower amount.
Not everyone qualifies. But for those who do, it can mean the difference between decades of debt and a fresh start.
Installment Agreements
If you can’t pay your tax debt in full but you can make monthly payments, an installment agreement might work. This is essentially a payment plan with the IRS or Minnesota Revenue.
The terms depend on how much you owe and what you can afford to pay. For smaller debts, you might get approved quickly online. For larger debts, we need to negotiate terms that work for your budget.
The key is setting up a payment plan you can actually stick to. If you default on an installment agreement, you’re back where you started, except now you’ve lost that option.
Penalty Abatement
Sometimes we can get your penalties reduced or eliminated entirely. This is called penalty abatement, and it can cut your debt significantly.
The IRS and Minnesota will consider abatement if you have reasonable cause for not paying or filing on time. Serious illness, natural disaster, death in the family, or reliance on bad tax advice can all qualify.
First-time penalty abatement is also available if you have a clean compliance history. If you’ve filed and paid on time for the past several years, you might qualify to have penalties removed just based on that track record.
“Currently Not Collectible Status”
If you genuinely cannot pay anything right now, we can request “Currently Not Collectible” status. This tells the IRS or Minnesota Revenue that collecting from you would create immediate financial hardship.
While you’re in this status, collection actions stop. Your wages won’t be garnished. Your bank account won’t be levied. The debt doesn’t go away, and interest keeps accruing, but you get time to get back on your feet.
This isn’t a permanent solution, but it can be a crucial temporary one when you’re facing a financial crisis.
The IRS and Minnesota Revenue are bureaucracies. They have procedures, forms, deadlines, and specific ways they want information presented. Knowing how to communicate with them matters.
We know what information they need, how they want it formatted, and what arguments they respond to. We know which revenue officers are reasonable and which ones aren’t. We know how to escalate issues when we’re not getting anywhere.
You could try to handle this yourself, but one mistake can cost you thousands of dollars or close off options you didn’t know you had.
Every relief option requires documentation. Tax returns, financial statements, bank records, pay stubs, proof of expenses. The list goes on.
If your documentation is incomplete or incorrect, your request gets denied. If you miss a deadline, you might not get another chance. We make sure everything is complete, accurate, and submitted on time.
The IRS and Minnesota look at what you earn and what you own when deciding if you qualify for relief. They want to know if you have the ability to pay.
They’ll look at your monthly income from all sources. They’ll look at your necessary living expenses. They’ll look at your assets, such as your house, your car, your retirement accounts, anything of value.
But here’s what matters: they use their formulas, not yours. They have specific allowances for housing, food, transportation, and other expenses. Sometimes those allowances are less than what you actually spend. We know how to present your financial situation in the way that gives you the best chance of qualifying for relief.
Before the IRS or Minnesota will consider any relief option, you need to be in filing compliance. That means all your required tax returns need to be filed.
If you haven’t filed in years, we help you get caught up. Sometimes we can file back returns in a way that minimizes your total tax liability. Sometimes we discover you’re owed refunds from years you never filed. Getting into compliance is the first step toward any solution.
An audit means the IRS or Minnesota Revenue is questioning something on your tax return. Maybe they want proof of deductions you claimed. Maybe they think you underreported income. Maybe they’re just randomly checking.
Audits are stressful, but they don’t have to be disasters. We represent you through the entire process. We gather the documentation they’re requesting. We communicate with the auditor. We negotiate if they propose changes to your return.
If you disagree with an audit result or a collection action, you have the right to appeal. We can take your case to the IRS Appeals Office or the Minnesota Appeals Division.
If that doesn’t resolve things, we can represent you in Tax Court. This is a formal legal proceeding where a judge decides your case. It’s rare to need to go this far, but when you do, you want someone who knows what they’re doing.
There are serious consequences of ignoring tax debt, including:
Wage Garnishments
The IRS can take up to 25% of your disposable income directly from your paycheck. Minnesota can take up to 25% as well. If you owe both, that’s potentially half your paycheck gone before you see it.
Wage garnishment doesn’t require a court order. The IRS sends a notice to your employer, and your employer has to comply. It’s automatic, it’s immediate, and it’s devastating to your ability to pay your other bills.
Bank Levies and Property Liens
A bank levy means the IRS or Minnesota freezes your bank account and takes everything in it to apply toward your tax debt. You can’t access your money. Checks bounce. Automatic payments fail.
A tax lien is a legal claim against your property. It shows up on your credit report. It makes it nearly impossible to sell your house or refinance your mortgage. It tells the world that you owe the government money.
Once collection actions start, they don’t stop on their own. But we can stop them.
When we file certain relief requests or appeals, collection actions must pause while your case is being considered. If we can show that a levy or garnishment would create immediate hardship, we can often get it released.
The key is acting quickly. Once your bank account is levied, getting that money back is much harder than stopping the levy before it happens.
Can I go to jail for not paying taxes?
You won’t go to jail just for owing money. Tax debt is a civil matter, not a criminal one. However, tax evasion—deliberately hiding income or lying on your returns—is a crime. If you filed honestly and just can’t pay, you’re not facing criminal charges.
Will bankruptcy eliminate my tax debt?
Sometimes. Certain income tax debts can be discharged in bankruptcy if they meet specific criteria related to how old they are and when you filed the returns. But not all tax debt qualifies, and bankruptcy isn’t always the best solution.
How long does the IRS have to collect?
Generally, the IRS has 10 years from the date they assessed your tax to collect it. After that, the debt expires. But certain actions can extend that deadline, and 10 years is a long time to live under the threat of collection.
What if I can’t afford to pay anything?
That’s what “Currently Not Collectible” status is for. We can show the IRS or Minnesota that you genuinely can’t pay right now, and they’ll stop collection efforts while you get back on your feet.
Tax debt doesn’t get better on its own. Every day you wait, the penalties and interest grow. Every day you wait, you’re one day closer to a wage garnishment or bank levy.
We’ve helped people across Minnesota get out from under tax debt they thought would follow them forever. We can help you too.
Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form. We’ll look at your situation, explain your options, and help you figure out the best path forward. You don’t have to face this alone.
Outstanding, absolutely outstanding. . . My only regret is that I did not pursue representation for my case sooner. I cannot speak highly enough of this firm and their services.
Outstanding, absolutely outstanding. . . My only regret is that I did not pursue representation for my case sooner. I cannot speak highly enough of this firm and their services.
Outstanding, absolutely outstanding. . . My only regret is that I did not pursue representation for my case sooner. I cannot speak highly enough of this firm and their services.