New Hampshire tax relief: options for state and IRS tax debt

Start by identifying who sent the bill. The IRS and the New Hampshire Department of Revenue Administration are completely separate: paying one does not reduce the other, and an IRS payment plan doesn't stop state collection (or the reverse). New Hampshire does not tax wage income, so most New Hampshire residents who owe taxes actually owe the IRS, not the state. New Hampshire historically taxed interest and dividend income; that tax has been repealed, so current New Hampshire debts usually involve business taxes such as the Business Profits and Business Enterprise taxes.

To check your federal balance, log in to your IRS Online Account or request an account transcript. For a New Hampshire balance, use the online services on the official New Hampshire Department of Revenue Administration website. Only call phone numbers you find on the agency's own website, never a number printed only on a letter you're unsure about.

Because New Hampshire has neither a wage tax nor a statewide sales tax, direct state tax debt is uncommon for individuals. Business owners who do owe the New Hampshire Department of Revenue Administration should read the notice carefully and use the agency's website for deadlines and payment options; we haven't independently verified New Hampshire's collection timelines for this page. For most residents the agency that matters is the IRS, and the federal process below applies in full.

Federal debt. The IRS offers short-term plans (up to 180 days) and long-term installment agreements. Individuals who owe $50,000 or less in combined tax, penalties and interest can usually apply online without a full financial statement; larger balances typically need Form 433-F or 433-A. Interest (currently 7% a year, set quarterly) and a reduced failure-to-pay penalty keep accruing while you pay. See IRS installment agreements and use our IRS payment plan calculator to estimate a monthly amount.

New Hampshire debt. If you owe the New Hampshire Department of Revenue Administration, ask the agency directly about payment arrangements through its official New Hampshire Department of Revenue Administration website.

For federal debt, the IRS Offer in Compromise lets some taxpayers settle for less than the full balance when the IRS agrees it can't collect the full amount. Eligibility depends on your income, allowable living expenses and the equity in your assets — the IRS calls this your reasonable collection potential. Most applicants don't qualify, and no one can predict a settlement amount from the balance alone. The IRS's free Pre-Qualifier tool is the best first check.

Because state tax debt is uncommon in New Hampshire, settlement questions here almost always involve the IRS program described above.

If paying would leave you unable to cover basic living expenses, the IRS can place your federal account in Currently Not Collectible status after reviewing your finances against its Collection Financial Standards. Collection activity pauses, but interest and penalties continue and the IRS may file a lien. Our financial hardship screener shows whether your situation looks like a hardship case. Penalties can sometimes be removed through first-time penalty abatement or reasonable cause, which can meaningfully shrink an older balance.

1. Confirm every balance — IRS Online Account for federal tax, the New Hampshire Department of Revenue Administration website for state tax.
2. File any missing returns so assessments reflect what you really owe.
3. Respond before each deadline. For federal debt, a final notice of intent to levy such as LT11 or Letter 1058 gives you a 30-day window to request a Collection Due Process hearing.
4. Pick a realistic option: full pay, payment plan, hardship status or, if you truly can't pay, an offer.
5. Stay current on new taxes — a missed filing or new balance can default an agreement.

Not sure where you fit? Answer eight quick questions in the calculator on this page to see which programs look likely for your situation. It's an educational estimate, not a guarantee.