For IRS tax liabilities, taxpayers who are unable to pay in full and who do not qualify for the Offer in Compromise program generally have two options to settle their tax debts with the IRS.
1) Currently Non-Collectible Status: For certain taxpayers facing economic hardship and with little future collections potential, the IRS is able to suspend collection activity in certain circumstances. The program is not heavily advertised by the IRS and considered a last resort when no other viable options appear readily available. Currently Non-Collectible status is difficult to obtain and requires an experienced advisor to guide you through the process and to negotiate with the IRS representatives.
Please contact our office if you are interested in obtaining non-collectible status.
2) Installment Agreement: These arrangements allow the taxpayer to pay a liability over a fixed period of time. The IRS will cease all collection action, including levies garnishments, as long as the taxpayer does not accrue additional liability and makes all of their required filings and payments. However, interest and late payment penalties will continue to accrue on the remainder of the balance and the IRS may file a state tax lien until the liability is satisfied.
Installment agreements are a convenient method to utilize future cash flow and to pay off liabilities over a fixed period of time. However, the IRS will only grant them as a last resort, and will want taxpayers to sell, borrow against their assets, and exhaust potential lines of credit before considering an installment agreement. The IRS’s stringent standards may be unworkable for individuals or they may refuse to grant them entirely, even to cash-strapped taxpayers or those facing insolvency.
An experienced tax attorney can help guide you through the installment agreement process and get the results that work best for you. Whether your goal is to pay the tax as quickly as possible to minimize the accruing interest and penalties, or to negotiate a minimum monthly payment to increase your financial flexibility, we can help. Furthermore, we can help roll your current compliance into your monthly installment payments, help stall collection actions, or help deal with difficult or inflexible IRS personnel.
If you have any questions or if we can further assist you, please contact our San Diego office.
For more information, please see:
- Offer in Compromise Main Page
- More about Offer in Compromises
- The Offer in Compromise Process
- An Overview of an Offer in Compromise
- Eligibility Requirements
- Pros and Cons of an Offer in Compromise
- How the IRS Evaluates an Offer in Compromise
- Why Retain RJS Law for your Offer in Compromise?
- National Tax Agencies