On July 1, 2025, the Senate passed the "One Big Beautiful Bill" - a sweeping tax and spending packages backed by President Trump. It’s being widely praised as a win for many taxpayers: larger tax credits, bigger refunds, and no federal tax on tips.

No Relief for Pre-Existing Tax Debt

Despite the bill’s high-profile benefits, it does not reduce or forgive existing IRS balances. Taxpayers with outstanding liabilities are not eligible for the full value of the new credits and may not see the expected financial relief. Instead, any refunds or credits could be automatically applied to your back taxes.

So while many are enjoying the financial perks, taxpayers in debt may find themselves worse off.

IRS Enforcement Is Likely to Intensify

The bill is projected to increase the federal deficit by $2.4 to $3.3 trillion over the next decade. Historically, such deficits often lead to increased IRS enforcement activity. With more pressure to collect unpaid taxes, individuals with unresolved liabilities may face:

• A surge in IRS notices and collection letters
• Garnishment of wages and bank levies
• Accelerated enforcement timelines
• Fewer opportunities to delay or defer collection

In short, the IRS may act more aggressively if you have unpaid tax debt.

Here’s What You Can Do if You Owe

The longer you wait, the more your balance grows with interest and penalties. Acting now gives you the best chance to resolve your debt.