Tax Debt Resolution & IRS Policies

Last updated on October 3, 2022

For any amount of tax debt, the IRS recommends taxpayers to pay the full amount. Even though the IRS quotes various benefits of paying in full, many taxpayers have limited financial capacity, which forces them to look for other options. The IRS has various tax debt payment plans, including Offer in Compromise and Partial Payment Installment Agreement that allow taxpayers to resolve back taxes without paying the full debt amount.

IRS’ Rules for Debt Resolution

The IRS sends notices to taxpayers regarding the tax debt and its payment before moving to aggressive collection actions such as a lien or levy. After receiving notice from the IRS regarding tax debt, taxpayers must immediately begin making efforts to resolve it. The hiring of a tax help professional is essential for taxpayers that cannot pay their tax debt in full, and resolve their case through a tax debt payment plan.

The IRS reviews the financial condition of taxpayers before qualifying them for a tax debt payment plan. Depending on the amount of taxes owed and the payment plan applied for, the IRS may request a detailed financial report or basic information about taxpayers’ income and assets.

IRS Debt Resolution through Tax Debt Reduction

Tax debt reduction can be achieved by taxpayers that do not have the financial capability to pay their entire tax debt. Not every taxpayer under tax debt can achieve tax debt reduction. Before qualifying taxpayers for a tax debt reduction plan such as Offer in Compromise, the IRS requests and reviews their finances, including income from all sources, and assets. Therefore, only taxpayers who can qualify for a tax reduction plan should apply for it.

Partial Payment Installment Agreement is another tax debt reduction plan through which taxpayers can get their tax debt reduced and pay the remaining amount in installments. This tax debt reduction plan allows taxpayers to resolve their tax debt comfortably. Taxpayers must explore all options and preferably use a professional help before selecting and applying for a payment plan.

Hiring Help for IRS Debt Resolution

Hiring a tax professional or a tax resolution company is recommended in those cases which require professional preparation of a tax debt case and negotiation with the IRS. In straightforward cases of tax debt where taxpayers pay the entire amount of back taxes in a lump sum, hiring of help is not required.

Before contacting the IRS or applying for a tax debt payment plan, taxpayers must educate themselves of its qualifying factors, its payment criteria, and IRS policies so that they may be able to achieve a resolution that is favorable for them.