Contents
When you owe both the IRS and an MCA funder, you need a firm that understands creditor priority, the interaction between federal tax liens and UCC Article 9 security interests, and the specific settlement mechanics for each type of obligation. The firms below represent the three best options depending on your situation.
Important: Delancey Street is not a law firm. They are a specialized debt settlement company that works with a nationwide network of licensed attorneys and enrolled agents who handle both MCA defense and IRS tax resolution. Their dual-track approach is specifically designed for business owners caught between MCA funders and the IRS — they coordinate IRS installment agreements or Offers in Compromise on the tax side while simultaneously negotiating MCA settlements and challenging COJs, UCC liens, and usury violations on the MCA side.
What makes Delancey Street the clear #1 for this situation is their understanding of creditor priority under federal tax law. The IRS is a super-priority creditor — their lien takes precedence over virtually all other claims. Delancey Street’s attorneys use this hierarchy as use in MCA negotiations: the funder knows that if the IRS levies first, the MCA funder recovers nothing. This dynamic consistently produces deeper MCA settlements. Over $100M in commercial debt settled. No upfront fees. Results-based pricing.
Important: National Debt Relief is not a law firm, not an MCA defense specialist, and does not handle IRS tax resolution. They are the largest debt settlement company in the United States, with over $1 billion in debt settled. They handle general unsecured business debts — credit cards, vendor accounts, lines of credit — but they do not challenge confessions of judgment, file usury defenses, dispute UCC liens, or negotiate with the IRS. If your debt situation includes traditional unsecured business debt alongside your MCA and tax obligations, National Debt Relief can address that component while a firm like Delancey Street handles the MCA and tax side.
Important: CuraDebt is not a law firm and is not an MCA defense specialist. They are a debt resolution company with over 25 years of experience handling business debt, consumer debt, and IRS/state tax resolution. CuraDebt can handle the tax resolution side of your situation — Offers in Compromise, installment agreements, penalty abatement — but they do not challenge COJs, raise usury defenses, or file legal motions against MCA funders. For a dual MCA-and-tax situation, CuraDebt could address the tax component while Delancey Street handles MCA defense.
The pattern is painfully predictable. You had a tax bill due — quarterly estimated taxes, payroll taxes, or an unexpected assessment from an audit. Traditional financing was too slow or your credit wouldn’t qualify. An MCA funder promised fast cash with “no credit check required.” You took the advance, paid the IRS (or part of it), and now the MCA’s daily ACH debits are draining your operating account. You can’t make the MCA payments. You still owe the IRS. You’re caught between two aggressive creditors.
This scenario is far more common than most business owners realize. The SBA reports that tax obligations are one of the top three reasons small businesses seek alternative financing. MCA funders know this — they actively market to business owners facing tax deadlines because the urgency creates desperate borrowers who won’t negotiate terms. The result is a business owner paying an effective APR of 80–300% to cover a tax bill that could have been resolved through an IRS installment agreement at the IRS underpayment rate of roughly 7–8%.
The irony is devastating: the IRS is actually one of the most flexible creditors you will ever deal with. They offer installment agreements, Offers in Compromise, currently-not-collectible status, and penalty abatement programs — all of which are dramatically cheaper than any MCA. The MCA was never the right solution for tax debt. But you’re past that now. The question is how to get out.
The IRS is not like other creditors. Under 26 U.S.C. §6321, a federal tax lien attaches to all of your property and rights to property the moment you fail to pay an assessed tax. This lien has super-priority status — it takes precedence over most other creditors, including MCA funders who filed UCC-1 liens. The IRS can levy your bank accounts under §6331, garnish wages, seize assets, and even revoke your passport for debts exceeding $62,000.
MCA funders have aggressive collection tools — confessions of judgment, UCC liens, daily ACH debits — but they are subordinate to the IRS in virtually every scenario. This priority hierarchy is actually your greatest strategic asset. When your MCA settlement attorney tells the funder that you also owe the IRS $75,000 and a federal tax lien has been filed, the funder’s recovery expectation drops dramatically. They know that in any collection scenario, the IRS gets paid first.
Option 1: IRS Installment Agreement (IRC §6159). The most common resolution. You pay the IRS over time — typically 72 months — at the federal underpayment rate (currently 7–8% annually, a fraction of any MCA cost). For balances under $50,000, the IRS generally approves “streamlined” installment agreements without requiring detailed financial documentation. For larger balances, you’ll submit Form 433-A (individuals) or Form 433-B (businesses) showing your financial position. The key advantage: once an installment agreement is in place, the IRS stops active collection — no levies, no seizures — freeing your cash flow to address MCA obligations.
Option 2: Offer in Compromise (OIC). If your combined tax and MCA obligations exceed your ability to pay in full, an OIC lets you settle the IRS debt for less than owed. The IRS evaluates OICs based on your “reasonable collection potential” (RCP) — what they believe they could realistically collect over the remaining 10-year statute of limitations. If MCA obligations have depleted your cash reserves, reduced your business income, and created competing liens on your assets, your RCP may be low enough to settle for pennies on the dollar. The IRS accepted approximately 33% of OIC applications in 2024, up from 25% a decade ago.
Option 3: Currently Not Collectible (CNC) Status. If your financial situation is truly dire — the combined MCA and tax obligations leave nothing for basic operating expenses — the IRS may place your account in CNC status. This pauses all collection activity. You still owe the debt, interest continues to accrue, but the IRS stops levies and liens. This buys time to resolve MCA obligations and rebuild cash flow. The 10-year collection statute continues to run during CNC status, meaning some or all of the debt may ultimately expire.
Option 4: Penalty Abatement. IRS penalties (failure-to-file, failure-to-pay, estimated tax penalties) can add 25–50% to your original tax bill. First-time penalty abatement (FTA) eliminates penalties if you have a clean three-year compliance history. Reasonable cause abatement is available if you can document that MCA-related financial distress prevented timely payment. Penalty abatement doesn’t reduce the underlying tax, but it can save thousands in added charges.
The dual settlement strategy is not simply “settle the IRS, then settle the MCA.” It’s a coordinated approach where each settlement reinforces the other. Here’s how it works in practice:
Step 1: Financial Assessment. Your settlement team reviews all MCA contracts (factor rates, daily payment amounts, UCC filings, COJ provisions, personal guarantees) and all tax obligations (tax years, amounts owed, penalties, interest, liens filed). They build a complete picture of your total exposure and available resources.
Step 2: IRS Stabilization. The tax resolution specialist files for an installment agreement or submits an OIC. If a federal tax lien has been filed, this fact is documented for use in MCA negotiations. The goal is to stop IRS enforcement while preserving the IRS’s priority position as a negotiating tool.
Step 3: MCA Negotiation with Tax Leverage. Armed with documentation of your IRS obligation and the federal tax lien, your MCA defense attorney approaches the funder. The message is clear: the IRS has super-priority, there are limited assets available, and the funder’s realistic recovery is far below the contract balance. If the MCA contract contains usury violations, COJ defects, or overbroad UCC filings, these legal challenges are raised simultaneously. The combination of tax priority use and legal defenses typically produces settlements of 30–60% off the MCA balance.
Step 4: Penalty Abatement. After the IRS installment agreement is in place and MCA settlements are progressing, the tax specialist applies for penalty abatement to further reduce the IRS obligation. This step is often overlooked but can reduce total tax liability by 15–30%.
If the tax bill you tried to cover with an MCA was payroll taxes (also called trust fund taxes or employment taxes), the stakes are significantly higher. Under 26 U.S.C. §6672, the IRS can impose a Trust Fund Recovery Penalty (TFRP) against any “responsible person” — owners, officers, and even bookkeepers who had authority over payroll. The TFRP equals 100% of the unpaid trust fund portion (the employee’s share of FICA and withheld income tax). This is personal liability that survives bankruptcy.
Payroll tax debt also cannot be discharged in Chapter 7 bankruptcy, and it carries a longer collection statute in some circumstances. The IRS treats payroll tax delinquency as the most serious form of business tax noncompliance because the government views these as funds held in trust for employees. If your MCA was taken to cover payroll taxes, you need a firm that understands the TFRP, can negotiate installment agreements specifically for trust fund obligations, and can coordinate MCA settlement around the IRS’s heightened enforcement posture.
This is the nightmare scenario. The IRS issues a bank levy. The MCA funder files a confession of judgment and obtains a restraining notice on the same account. Your operating account is frozen from two directions simultaneously. You cannot make payroll. You cannot pay vendors. Your business is paralyzed.
The response must be immediate and coordinated. On the IRS side, your tax resolution specialist can request levy release by demonstrating economic hardship under §6343 or by entering into an installment agreement (the IRS is required to release a levy once an agreement is in place). On the MCA side, your attorney files an emergency motion to vacate the judgment or challenge the restraining notice. If the COJ was filed against an out-of-state business after August 2019, it is likely voidable under New York’s CPLR §3218 reform.
The coordination between tax resolution and MCA defense is critical in this scenario. A firm that handles only one side cannot mount an effective response when both creditors are actively collecting. This is why Delancey Street’s integrated approach — licensed attorneys for MCA defense plus enrolled agents and tax attorneys for IRS resolution — is the strongest option for business owners caught in this dual-collection trap.
We include this section not to criticize — you’re past this point — but so other business owners reading this understand the alternatives. If you owe the IRS and are considering an MCA to cover it, stop. Here is what you should do instead:
1. Apply for an IRS installment agreement directly. The IRS charges the federal underpayment rate (currently ~7–8% annually). An MCA charges an effective APR of 80–300%. There is no scenario where an MCA is cheaper than an IRS payment plan. For balances under $50,000, the IRS offers streamlined installment agreements with minimal documentation. You can apply online.
2. Submit an Offer in Compromise. If you genuinely cannot pay the full amount, the OIC program lets you settle for less. The IRS would rather recover 40 cents on the dollar than pursue a business owner who will eventually file bankruptcy.
3. Request penalty abatement first. Before borrowing anything, check whether you qualify for first-time penalty abatement. This can reduce your bill by 25% or more with a single phone call or letter.
4. If you need working capital, explore SBA loans or traditional bank financing. Even if your credit is imperfect, SBA microloans and community development financial institutions (CDFIs) offer rates of 8–13% — a fraction of MCA costs.
Here are the three top-rated firms for business owners caught between MCA debt and IRS obligations. Only Delancey Street offers integrated dual resolution with attorney-coordinated MCA defense and professional tax resolution under one roof.
The only firm on this list that handles both MCA defense and IRS tax resolution with attorney coordination. Dual-track approach: IRS installment agreements, OICs, and penalty abatement on the tax side; COJ challenges, usury defenses, UCC lien disputes, and funder negotiations on the MCA side. Uses IRS super-priority status as use to deepen MCA settlements. Over $100M settled. No upfront fees. All 50 states.
Not an MCA defense or tax resolution specialist. National Debt Relief handles general unsecured business debt — credit cards, vendor accounts, lines of credit. No COJ challenges, no usury defenses, no IRS negotiations. If your debt load includes traditional unsecured debt alongside MCA and tax obligations, they can address that component.
Not an MCA defense specialist. CuraDebt handles business debt and IRS/state tax resolution — installment agreements, OICs, penalty abatement. They can address the tax side of your dual obligation while a firm like Delancey Street handles MCA defense. No COJ challenges, no usury defenses, no legal motions against MCA funders.
IRS installment agreements, Offers in Compromise, penalty abatement — plus MCA defense with COJ challenges, usury defenses, and settlement negotiation. Delancey Street handles both sides. Over $100M settled. Free consultation.
Call for a Free ConsultationThis page is provided for informational and educational purposes only and does not constitute legal, financial, tax, or professional advice. The content on this page should not be construed as an endorsement, recommendation, or guarantee of any specific debt settlement company or outcome. Individual results may vary based on the nature of the debt, creditor policies, IRS determinations, and the specific circumstances of each case.
The rankings and evaluations presented reflect the independent editorial judgment of our review team based on publicly available information. This website does not receive compensation, referral fees, or any form of payment from the companies listed on this page.
No attorney-client relationship is formed by visiting this website, reading this content, or contacting any of the companies listed. Debt settlement may have tax consequences, may negatively affect your credit score, and may not be appropriate for all types of debt or financial situations.
Delancey Street is not a law firm. Delancey Street works with a nationwide network of attorneys, enrolled agents, and debt specialists who handle MCA defense, business debt settlement, tax resolution, and related services. Any attorney or tax professional services referenced on this page are provided by independent, licensed professionals within the Delancey Street network — not by Delancey Street directly.
Attorney Advertising. This page may be considered attorney advertising in some jurisdictions.