Tax Debt Resolution Methods

Last updated on January 9, 2023

A tax debt can be resolved through various ways, but depending on the particulars of the case, there is only one method of resolution that can give a taxpayer the most benefit. There are various IRS tax debt payment plans, namely Installment Agreement, Offer in Compromise and Currently Not Collectible that can be used for tax debt resolution.

Every payment plan has unique qualifying factors that must be met to begin the resolution process. For example, to qualify for an Offer in Compromise, the tax debt payment plan that reduces a taxpayer’s tax debt amount, the applicant must be financially incapable of paying the entire tax debt. The IRS will consider the overall financial situation of a taxpayer before agreeing to tax debt reduction. It is important to seek professional help when looking for tax debt reduction, as it involves accurate preparation of the case and negotiation with the IRS.

Those taxpayers who are capable of paying the entire tax debt, but are not comfortable paying it in a lump sum can use Installment Agreement. Under this IRS tax debt resolution plan, taxpayers can pay the tax debt in fixed monthly installments. Even though ultimately you will be paying more in tax debt because of the penalties and interest that the IRS will continue to charge until the debt is paid in full, it won’t upset your financial stability.

Tax debt resolution can be quick and smooth if the right steps are taken for achieving a successful resolution from the beginning. Effective planning goes a long way in easing the resolution process.