Not being able to pay the full amount of tax debt should not stop taxpayers from seeking a tax debt resolution. There are various IRS tax debt resolution plans that allow taxpayers to resolve their tax debt without paying the entire amount of tax debt. A Partial Payment Installment Agreement or an Offer in Compromise are two popular debt payment plans that involve an over reduction in debt.
Under a Partial Payment Installment Agreement, taxpayers pay a reduced amount of the tax debt in monthly payments. Only taxpayers who cannot afford to pay the entire amount of debt should apply for a Partial Payment Installment Agreement.
The IRS charges penalties and interest on any amount of tax debt that remains to be paid, even if taxpayers are under an IRS debt payment plan. Therefore, postponing payment or paying in installments increases the overall amount of tax debt over time.
An Offer in Compromise is a popular tax debt reduction plan where taxpayers who cannot afford to pay the entire tax debt are awarded reduction in the tax debt amount from the IRS to help them resolve their case. This resolution plan is not for those who have the financial ability to pay their total tax debt, in installments or in a lump sum.
Taxpayers under tax debt can resolve their tax debt as soon as possible to avoid the collection of penalties and interest, and the risk of collection actions.