From $180,000 in Tax Debt to Financial Freedom: A Restaurant Owner's Journey Back
Nobody starts a business thinking they'll end up owing six figures to the IRS. I certainly didn't when I opened my dream restaurant in Portland back in 2016. But life has a way of throwing curveballs when you least expect them, and sometimes those curveballs come in the form of a global pandemic.
Here's my story of how I accumulated nearly $180,000 in tax debt—and more importantly, how I got out from under it.
The Glory Days
For the first three years, my farm-to-table restaurant was everything I'd imagined. We had a loyal customer base, great reviews, and we were turning a solid profit. I was living the dream, doing what I loved, and making good money doing it.
I paid my taxes on time, kept my staff happy, and even started saving for a second location. Life was good.
Then March 2020 happened.
When Everything Changed
You know the story. COVID-19 shut down restaurants across the country. Overnight, my dining room went from full to empty. We pivoted to takeout, but it wasn't enough to cover our overhead. I burned through my savings trying to keep the doors open and my staff employed.
During those early months, I made a decision that seemed reasonable at the time but would haunt me for years: I stopped making my quarterly estimated tax payments. The money simply wasn't there. I told myself it was temporary—just until things got back to normal.
I also stopped setting aside money for payroll taxes. Every dollar was going toward keeping the lights on, paying suppliers, and covering what I could for my skeleton crew.
The Snowball Effect
Here's the thing about tax debt: it doesn't announce itself with sirens and flashing lights. Your electricity doesn't get shut off. Your suppliers don't stop delivering. The consequences are quiet at first, which makes it terrifyingly easy to keep putting it off.
"I'll deal with it next month," became my mantra.
Next month turned into six months. Six months turned into a year. Before I knew it, I hadn't filed taxes or made payments for almost three years.
I knew I owed money. What I didn't know was how much. I was too afraid to find out, so I just... didn't. I shoved the IRS notices in a drawer and tried to pretend they didn't exist.
The Wake-Up Call
In August 2023, I got a letter I couldn't ignore. The IRS had calculated what they estimated I owed based on income reported by my credit card processor and vendors: 180,000.
My hands were shaking as I read it. How had it gotten this bad?
The letter gave me 30 days to respond or face enforcement action, which could include bank levies and liens against my business and personal assets.
I didn't sleep that night. Or the next. I finally broke down and called a tax resolution specialist my accountant recommended.
The Path Forward
The first thing my tax professional told me was something I desperately needed to hear: "This is fixable. You're not alone, and there are options."
We started by getting my books in order. I hadn't been keeping proper records during the chaos of the pandemic, and my bookkeeping was a mess. We needed accurate financial statements to file the missing tax returns and to show the IRS my real financial picture.
This took three months. My tax advisor worked with a bookkeeping team to reconstruct years of transactions, categorize expenses, and identify deductions I hadn't known I could take. Turns out, the IRS's estimate of what I owed was significantly higher than my actual tax liability because they didn't account for any of my business expenses.
When we finally filed my returns, my actual tax debt was around $95,000—still a huge number, but nearly half of what the IRS had estimated.
The Resolution Process
With accurate books and filed returns, we could now negotiate with the IRS. My advisor explained several options:
Installment Agreement: A payment plan spread over up to 72 months. Based on my current income and expenses, we calculated I could afford about $1,600 per month.
Offer in Compromise: If you truly can't pay what you owe, you might be able to settle for less. We explored this option by documenting my assets, income, and necessary living expenses.
Currently Not Collectible Status: If paying anything would cause financial hardship, the IRS can temporarily pause collection efforts.
We ended up pursuing an Offer in Compromise. After submitting a detailed financial analysis showing that my ability to pay was limited, the IRS accepted an offer to settle my 32,000, payable over 24 months.
I won't lie—coming up with $1,333 every month for two years was tough. I had to cut personal expenses to the bone, take on consulting work on the side, and delay any business expansion plans. But it was doable, and more importantly, I could see the light at the end of the tunnel.
Lessons I Learned the Hard Way
Looking back, here's what I wish I'd known:
The IRS is more willing to work with you than you think. They have programs specifically designed to help taxpayers who've fallen behind. But you have to come to them first, before they come to you.
Accurate bookkeeping is non-negotiable. When your books are a mess, the IRS makes assumptions—and those assumptions are never in your favor. Clean books can literally save you tens of thousands of dollars.
Don't wait. Every month you delay, penalties and interest are adding to your debt. The penalty for not filing is typically 5% of unpaid taxes per month, up to 25%. Interest compounds daily. My 85,000 in penalties and interest before I finally addressed it.
Get professional help. I thought I couldn't afford to hire a tax professional. The truth is, I couldn't afford not to. The money I saved through proper deductions and negotiated settlement far exceeded what I paid in professional fees.
You're not alone. The shame and isolation I felt almost paralyzed me. But tax debt is more common than you think, especially among small business owners. The IRS works with thousands of taxpayers every year to resolve debt.
Moving Forward
I made my final payment in September 2025. It's been two months, and I still get emotional thinking about it.
The restaurant is thriving again. I'm current on all my taxes. I've built up a six-month emergency fund. And most importantly, I've implemented systems to make sure I never end up in that situation again.
I now have a bookkeeper who reconciles my accounts monthly. I set aside 30% of gross revenue for taxes—it goes into a separate account I don't touch. And I work with a CPA who reviews my financials quarterly and makes sure I'm on track with estimated payments.
If You're in Tax Debt Right Now
If you're reading this because you're facing a similar situation, here's what you need to do:
Stop avoiding it. I know it's scary, but ignoring it only makes it worse. The IRS is not going away.
Get your financial records organized. You can't resolve tax debt without knowing your true financial picture. If your books are behind, catch them up. If you can't do it yourself, hire someone who can.
File your returns. Even if you can't pay, file the returns. The penalty for not filing is much steeper than the penalty for not paying.
Explore your options. Installment agreements, offers in compromise, and other programs exist for a reason. A qualified tax professional can help you determine which path makes sense for your situation.
Take action today. Not tomorrow, not next week. Today. Make a phone call. Send an email. Take the first step.
I'm not going to sugarcoat it—resolving tax debt is hard work, both financially and emotionally. But it's also incredibly liberating. The weight that lifts when you make that final payment is indescribable.
You can get through this. I did, and so have thousands of other business owners. The path forward exists—you just have to be willing to take the first step.
Resources to Get Started
While I can't recommend specific services, here are the types of professionals who can help:
- Enrolled Agents: Tax professionals specifically licensed by the IRS
- CPAs with tax resolution experience: Look for specialists in IRS debt resolution
- Tax attorneys: For complex cases or when facing legal action
- Bookkeeping services: To get your financial records caught up and organized
The IRS also has resources on their website (irs.gov) about payment plans, offers in compromise, and taxpayer rights. They even have a toll-free number (1-800-829-1040) where you can discuss your situation, though I'd recommend talking to a professional first so you're prepared.
Remember: owing money to the IRS doesn't make you a bad person or a failure. It makes you human. What matters is what you do next.
You've got this.
