Tax Debt: Methods of Resolution

Last updated on January 10, 2023

In many tax debt cases, resolution involves qualifying for a tax debt payment plan because most taxpayers, especially those with substantial debt, cannot pay the entire debt amount in a single payment. There are various IRS payment plans, including Installment Agreements, the Offer in Compromise program, and Currently Not Collectible. These payment plans help taxpayers to pay their tax debt in installments, get tax debt reduction, and postpone tax debt payment respectively.

One of the most common methods of tax debt resolution is Installment Agreement. There are many kinds of Installment Agreements, including Streamlined Installment Agreement, In-Business Trust Fund Express Installment Agreement (IBTF-Express IA), and Partial Payment Installment Agreement. Each tax debt payment plan has unique qualifying factors that must be met. The IRS will review the financial condition of the taxpayer to judge the ability to pay.

To choose the most appropriate tax debt payment plan, taxpayers must understand the particulars of their tax case and be familiar with the tax debt payment plans and IRS policies. It is advisable to hire professional tax help if the case requires applying for a tax debt payment plan. The tax profesional will explore methods to get as much relief as possible. The IRS allows reduction/removal of penalties, reduction of tax debt and the release of a spouse from tax debt payment under certain programs. A tax professional will help the taxpayer to explore all options available, and choose the best option for their situation.