Most taxpayers believe that if they cannot pay their IRS debt, they cannot resolve it. It is a myth that leads to many taxpayers facing tax liens and tax levies. Therefore, it is essential for taxpayers to know that the IRS provides them with various options to satisfy their tax debt.
The IRS has payment plans that provide an opportunity for taxpayers to get back into compliance without having to pay the full tax debt amount. Taxpayers may note that only those whose financial condition qualifies can get their tax debt reduced, postponed or forgiven.
Taxpayers who can pay a partial amount or the full amount in installments should explore IRS debt payment plans, such as a Partial Payment Installment Agreement or an Installment Agreement.
The Currently Not Collectible program is an IRS payment plan that does not require any payments. The taxpayer who qualifies receives an extension of time to pay because of their present economic hardship. The IRS periodically reviews a taxpayer’s situation to check for any improvement. While a taxpayer is in this program, the IRS does not start collection actions against them.
An Offer in Compromise is another IRS debt payment plan where taxpayers who are experiencing financial hardship can get their tax debt reduced. This much-advertised and much-abused plan allows taxpayers to pay a reduced amount and get back into compliance.
Taxpayers should be careful while choosing an IRS debt payment plan, as there are penalties for applying for a plan a taxpayer is clearly not eligible for.