Can an IRS Installment Plan or Offer in Compromise Resolve Back Taxes?
A taxpayer’s real fear of not having the money to settle back-taxes is thinking that they cannot do anything about their debt. Most people are completely unaware that there are IRS sanctioned payment options available. This means there is a high chance of them qualifying for an Internal Revenue Service tax settlement program.
As a taxpayer, you should always question which Internal Revenue Service tax settlement is best. Is it the installment plan or the Offer in Compromise? However, choosing the most suitable option of the two is not always clear cut because every taxpayer has a unique set of circumstances as to why there are back taxes. Both programs work well depending on the particular situation in question.
There are many reasons why an individual may a large amount in back taxes. The reasons could be personal hardship, legal judgments, a failed business or unexpected medical costs. If you can’t pay your tax bill, the Internal Revenue Service makes it possible for you to make them an offer. This is called an Offer in Compromise. It is likely you will get a large discount if you apply for this program and so it is suitable for those who owe a large amount. An added advantage is you get to pay the tax bill once and for all. You make your offer at a meeting with the Internal Revenue Service.
However, if you do not have the cash means to pay your back taxes in one payment then you should consider an Installment Agreement (or Internal Revenue Service Payment Plan). You do need to have the money to pay off your debt over a specified period of time. This is exactly the same as paying off any expensive item by small amounts each month. Once you agree to a program you have the responsibility of making your payments on time every month.
