There are various ways to pay IRS tax debt, but taxpayers must know that the IRS has restrictions on every tax debt payment program. The choosing of a tax debt payment program depends on the financial condition of the taxpayers, their assets and liabilities, the amount of tax debt and other factors.
Although the most convenient method for taxpayers is to pay the entire tax debt amount in a single payment, many taxpayers’ financial condition does not allow it. Taxpayers who cannot return the entire tax debt amount in a single payment may opt for other IRS tax debt payment programs such as Installment Agreement, Partial Payment Installment Agreement, Offer in Compromise and Currently Not Collectible.
Under Installment Agreement, taxpayers may pay their IRS tax debt in fixed monthly installments, but they need to keep in mind that the IRS charges interest on the tax debt that remains to be paid.
Under Partial Payment Installment Agreement, the IRS reduces the tax debt amount to be paid. Taxpayers may pay the remaining amount in fixed monthly installments.
Under Offer in Compromise, the IRS substantially reduces the total tax debt owed considering the inability of the taxpayer to pay the tax debt in full.
Under Currently Not Collectible, the IRS postpones the collection of tax debt because of the bad financial condition of the taxpayers and his/her inability to pay any amount of IRS tax debt.
Taxpayers may take the help of tax services such as tax resolution companies or tax professionals to choose an IRS debt payment program that provides them the most benefits.