IRS Payment Plans for Tax Debt Resolution

Last updated on May 15, 2023

Resolution of IRS tax debt does not necessarily mean payment of the entire tax debt. IRS payment plans are designed to assist in the resolution of tax debt for taxpayers that cannot pay the full or partial amount of tax debt.

For payment of the tax debt in installments, there are various Installment Agreement plans available. An Installment Agreement plan is based on the total amount of tax debt owed. Depending on the tax debt amount owed, the IRS determines how much financial information they will require to determine the financial capability of the applicant to fulfill the tax debt. Based on the financial information, the IRS will design an agreement where the taxpayer will need to pay a fixed amount each month for a fixed period of time to pay the determined tax debt.

Under the Partial Payment Installment Agreement, taxpayers can get a reduction in tax debt. For tax debt reduction, taxpayers may consider Offer in Compromise, a popular tax debt reduction plan. Under an Office in Compromise, taxpayers need to provide extensive financial information to the IRS so that they may determine the financial strength of the taxpayer and decide how much reduction must be done to achieve resolution of tax debt.

Currently Not Collectible is an IRS tax debt resolution plan which allows postponement of tax debt. A taxpayer that does not have the ability to pay any amount of the tax debt can consider applying for Currently Not Collectible.