IRS Tax Debt Payment Plan: Offer in Compromise

Last updated on May 16, 2023

When you are looking for tax debt resolution, you may be able to achieve reduction in tax debt if you cannot afford to pay your full tax debt amount. The IRS will require you to share your financial information with them, which may include a financial statement. Therefore, apply for Offer in Compromise only if you have limited finances.

If payment of the full tax debt will force you into a financial crisis where you cannot meet basic living needs, then the IRS will have no option but to reduce your tax debt amount. Consider other tax debt reduction plans such as Partial Payment Installment Agreement to resolve your tax debt by paying less, if their requirements suit you better.

Before applying for an Offer in Compromise, make sure that you can fulfill its payment requirements because defaulting on an agreement can complicate the case and make it difficult to qualify for a payment plan.

The amount of tax debt reduction depends upon your financial situation and your ability to pay. The IRS seeks to get the maximum amount in tax debt that they can, but you can negotiate with the IRS and achieve a more beneficial resolution. For preparing your tax case, representation and negotiation, it is best to use the services of a tax professional or a tax service. Their expertise and experience will help you to get back into compliance affordably.