September 12, 2015

21026242_sAn offer in compromise is one of the most effective and popular ways to resolve tax problems with the IRS. This agreement allows a taxpayer to settle his or her tax liabilities with the IRS for an amount less than what is owed. This program, however, is not for everyone. For some individuals, it is not even an option.

What happens if you are not a candidate for this particular form of relief? The good news is that there are still other options for resolving your tax debt.

The first and most likely option for you to consider is an installment agreement with the IRS. Simply put, an installment agreement is a regular payment plan with the IRS. The total amount of the installment agreement is based on your monthly income and expenses.

The primary goal of an installment agreement is to determine an amount that will pay off your owed debt within a reasonable time period, without altering your lifestyle significantly. The IRS will suspend all collection action – including wage garnishments and bank levies – provided that you make all required payments and filings and do not accrue any additional liability. Interest and late payment penalties will continue to accrue on the remainder of the balance each month. In most instances, however, the IRS will want you to first sell your assets, borrow against your assets, and exhaust all lines of credit before applying for an installment agreement.

Another option to look into is to be placed in currently not collectible status. This is a particularly viable option if you are facing economic hardship and do not have enough money to even make small monthly payments. With a currently not collectible status, the IRS essentially agrees to suspend all active collection measures against you for a certain time period in order to give you a chance to get back on your feet. You are not required to make any payments to the IRS, although interest will continue to accrue. The currently not collectible status generally lasts anywhere from 6 to 12 months before your financial situation is reassessed.

The IRS does not heavily advertise this program as it is typically considered a last resort when there are no other viable options available. Take note that it is difficult to obtain a currently not collectible status, and the services of an experienced tax legal professional may be needed to negotiate with the IRS and guide you through the process.


Categories: IRS, Tax Penalties, Uncategorized