There are various ways to pay tax debt. The simplest method to pay back taxes is to pay the full debt amount, including penalties and interest charged on it. As the IRS prefers full payment to any other payment option, there is no friction between the IRS and the taxpayer payee. For those who cannot pay their full tax debt in a lump sum, there are various payment plans, the most popular of which are Installment Agreements.
Using an Installment Agreement, you can pay your back taxes in fixed monthly installments. There are many kinds of Installment Agreements based on the amount of tax debt owed. The lesser the amount of back taxes you owe, the simpler the resolution requirements are. To pay tax debt through any of the Installment Agreement, though, you will need to share certain financial information with the IRS. The IRS uses this information to judge your ability to pay.
It is best to consult a tax professional to consider getting a waiver on penalties, and applying for the most appropriate payment plan. Before applying for a payment plan, carefully consider all its payment requirements because in case of defaulting on an agreement, the IRS will terminate the agreement and begin charging penalty and interest on the unpaid taxes. Therefore, choose your tax help wisely and prepare your case professionally before contacting the IRS.