IRS tax settlements may be solutions for people who, for various reasons, can’t afford to pay their tax debts. The tax settlement options are only available to those who qualify, with factors such as income and employment status affecting eligibility. The six IRS department settlement options include: offer in compromise (or OIC), installment agreement, partial payment installment agreement, currently not collectible, bankruptcy or by speaking to a tax professional to help you make a plan. If you aren’t sure what the first steps are to making a tax settlement plan, then you should always speak with a tax professional.
IRS Debt Settlement Options
- Offer in compromise
- Installment agreement
- Partial payment installment agreement
- Currently not collectible
- Bankruptcy
- Meet with a tax professional
Offer in Compromise
An offer in compromise is one of the more common ways of making settlement with the IRS. It can be very difficult to qualify for this method. With the Offer in Compromise -or the OIC- option people are required to offer up an amount that they are able to pay that will be more worth it to the IRS. It has to be an amount that is more worth it to the IRS, instead of them having to make forced collections that would force you into financial hardship.
Highlights
- OIC is an option that is an offer of money to stop forced collections from the IRS.
- Tax payers must offer an amount.
- The amount offered must be worth it to the IRS that they won’t force collections on the taxpayer.
Installment Agreement
An installment agreement is a common way in which people will pay back taxes, if they are unable to pay back everything in full. This method requires the taxpayer to pay back the taxes they owe in monthly increments that can last up to three years. This is an easy method to qualify for if they individual tax payer owes less than $25,000 in taxes. If the amount is more a tax professional will be required to take care of an installment agreement plan.
Highlights
- Installment agreements are a common way of paying back taxes.
- The installment agreements require payments over a period of up to three years.
- If you owe less than $25,000 in back taxes this is an easy method to choose.
Partial Payment Installment
A partial payment installment involves making monthly payments to pay back taxes. The final amount may be part of the initial amount owed. This option is only available to those who cannot pay back the initial amount that was owed to the IRS. An installment agreement is planned out with the tax payer and the IRS in the situation of a partial payment installment agreement.
Highlights
- Partial payment installment involves months payments to pay back taxes that are owed to the IRS.
- The monthly payments may sum up to less than what the initial amount owed in taxes were.
- The IRS only permits this option if the tax payer can not pay back the full amount owed.
Currently Not Collectible
A currently not collectible choice of settlement requires the tax payer to request a period of time that the IRS cannot collect payments for the amount of taxes owed. This settlement option is available to those who want to save up for the amount of taxes that are owed without having the pressure of collection on them while they do so. The goal is to either save up for the amount of taxes or to put together a decent amount to start making monthly payments to pay off the taxes owed.
Highlights
- Currently not collectible is a state that allows tax payers to not be collected from for a certain amount of time.
- Currently not collectible is a settlement that is only for those who cannot afford to be collected from right away.
- The idea is to save up for the amount owed in the time given, so taxes can begin to be collected.
Bankruptcy
A bankruptcy is an order to have all or part of your IRS debt discharged. This is only available for those who qualify under Chapter 7 and the Chapter 13 bankruptcy IRS tax information. You also have to be approved in bankruptcy court under the Chapter 13 tax settlement qualifications. Other certain, very specified qualifications are required for bankruptcy to be accepted. The tax debt has to be due for over three years. Tax filing has to be filed for two years. A tax assessment has to have been set for two hundred and forty days.
Highlights
- Bankruptcy is when all or part of IRS debt is discharged.
- Approval has to be made in bankruptcy court under the qualifications of Chapter 7 and Chapter 13.
- Tax assessment has to be set two hundred and forty days for bankruptcy filing to be accepted.
Speaking to a Tax Professional
If you are going through tax debt, the best thing is to speak with a tax professional about the best plan for your tax settlement needs. The tax professionals that will help you out are a licensed tax attorney, certified public accountant or an enrolled tax agent. They will be able to help you through all of the IRS tax settlements. They will also be able to represent you when by communicating directly to the IRS for you.
Highlights
- Tax professionals are the best plan for tax settlement needs.
- Tax professionals will help you select the right IRS tax settlement plan for you.
- Tax professionals can communicate directly to the IRS for you.
Conclusion
The top six IRS Dept settlement options depend on what kind of tax settlement option is best for your debt situation. If you don’t know how to select the best option for you, always contact a tax professional to assist you with making a plan. The top six choices are: offer in compromise (or OIC), installment agreement, partial payment installment agreement, currently not collectible, bankruptcy or by speaking to a tax professional to help you make a plan.