Solutions
Installment Agreement (Payment Plan)
If you owe the IRS and cannot pay the balance immediately, I can help you negotiate a payment plan that allows you to pay the IRS over time. Payment plans are the most common tax debt resolution tool. At the end of 2022, there were 3,713,414 payment plans in place. Of course, the IRS would like you to pay your balance in full immediately. Alternatively, they want you to pay as much as possible each month until it is paid in full. The general rule is that the IRS will only require a monthly payment amount you can afford after taking into account your income and necessary living expenses. However, there are several different categories of available payment plans, and in many cases, we can negotiate a lower payment than you would have expected. Once a payment plan is in place, you pay your IRS bill monthly without having to worry about asset seizures or other enforced collection efforts by the IRS. If you would like to discuss how an IRS Installment Agreement might work for you, please contact me.
Currently Not Collectible
If you cannot afford a payment plan because all of your monthly income is spent on living expenses, you may qualify for a Currently Not Collectible status. If your case is categorized as Currently Not Collectible, the IRS will suspend collections, typically for a year (although I have seen taxpayers in this status for much longer). You may need to provide financial statements and other evidence that supports your inability to pay, but many taxpayers can have their accounts classified as Currently Not Collectible, allowing them to regroup and recover from financial setbacks. The IRS will review your account periodically, and you may be asked to provide updated financial information at some point. Currently Not Collectible status can be a welcome relief for taxpayers who are facing financial difficulty.
Offer in Compromise (Settlement)
Although this program is used less frequently, you have probably seen a number of advertisements for settling your tax debt. This is called the Offer in Compromise program, and for the right taxpayer under the right circumstances, this program can be a lifesaver. It is not for everybody, however. According to the most recent statistics, only about 36% of Offers in Compromise are accepted by the IRS.
The Offer in Compromise is a program authorized by Congress and implemented by the IRS that allows the IRS to accept a settlement for less than the full amount of tax, penalties, and interest owed. The goal of the IRS, in these cases, is to collect what is potentially collectible at the earliest possible time and at the least cost to the government.
If you find yourself owing more money to the IRS than you can pay, it may be worthwhile to explore the possibility of settling your IRS debt using this program. If you qualify, you can pay your settlement in a lump sum or pay it over the course of up to 24 months. The Offer in Compromise program can be a potent resolution tool for taxpayers. If you would like to explore the possibility of using this program, please contact me so we can discuss the particulars of your case.
