The IRS has various payment plans that are specifically designed to help individuals with different financial conditions resolve their back taxes. Taxpayers that are not financially capable of paying their entire tax debt in a single payment may qualify for an Installment Agreement. There are various kinds of Installment Agreements, each with different resolution requirements dependent upon the amount of tax debt owed. The IRS has extensive qualifying requirements for large tax debt amounts.
Taxpayers that do not have the financial strength to pay their entire tax debt may also qualify for an Offer in Compromise or a Partial Payment Installment Agreement. Both these payment plans provide tax debt reduction, but have different qualifying factors. When applying for reduction plans, taxpayers must ensure that they meet the eligibility requirements. If the IRS finds that the applicant has full financial ability to pay their back taxes, they may be penalized.
Those taxpayers that cannot pay any amount of their back taxes can also seek relief. They can achieve the Currently Not Collectible (CNC) status for their tax debt case to avoid collection actions. Qualifying for CNC stops all collection actions and helps individuals pay their tax debt only once their financial condition improves.