Which IRS Payment Option Fits You? Exploring the Installment Agreement and Offer in Compromise
It's difficult to pick the best IRS Payment Option for your situation, if only because they are all so unlike each other. The most popular options when it comes to choosing an IRS Payment Option with the IRS are the Offer in Compromise and Installment Agreement.
With an Installment Agreement, you can pay back a debt via a set amount of monthly payments. The most commonly used IRS tax debt payment arrangement are these Installment Agreements. This is perfect for the IRS, keeping in mind how much profit this can make them at your expense. Keep reading if you want to know the truth behind IRS Installment Agreements.
Throwing away your hard-earned cash paying the IRS 12 times a year via an Installment Agreement can start to feel like treading water. That is because the massive interest and penalties on your IRS Tax Debt keep building up monthly!
Are there any choices left for me? If there's no other alternative, the Installment Agreement give you the option to resolve what you owe over a predetermined amount of time using monthly installments. You will soon see it's costing your bank account a good amount in penalties and interest. Are there other alternatives?
Is Paying in Full an Option? Most individuals absolutely cannot pay their whole IRS tax debt in one lump sum, but if you are one of the fortunate few that is able to borrow from family, friends, or financial institution to get this problem taken care of... what's the hold up? You could save a lot in penalties and interest by paying what you owe all at one time!
Credit Card: If the interest accruement on your credit card is far less than the IRS payments, and your credit limit can handle it, use your credit card to pay the tax debt. It will be easier to speak with MasterCard, American Express, Discover, Visa, etc. than with the IRS. Unlike the IRS, your credit card companies are unlikely to levy your assets or issue a tax lien. You should know, if you use your credit card to pay your debt, the IRS will document the amount you saved as "income." A nasty game, but they do it!
Offer in Compromise (OIC): Few tax payers will be eligible for an Offer in Compromise (OIC). But, you may be accepted for an Offer if you meet any of the below 3 bullets.
- Unable to Pay: If you are unable to fulfill your IRS tax debt in full before the 10 year limitations Statute runs out, you might be eligible for an Offer in Compromise (OIC). The IRS will examine your ability to pay off your debt, even considering factors such as heath and age.
- Doubt as to Liability: If you're not responsible for the IRS debt, you may be eligible. Be prepared to show that you're not responsible for the IRS tax debt estimated.
- Hardship: You might be considered for an Offer if a unpreventable affliction is hindering you from earning money (ex: handicapped, disability, etc.).
Save yourself lots of money by lowering the total amount owed with an Offer in Compromise (OIC) program. This also resolves the IRS tax debt in one swift motion.
Currently Not Collectible(CNC): The IRS might give you a permanent or temporary reprieve from its collection efforts, depending on how bad your hardship circumstances are. If you cannot pay, you cannot pay.
Getting Help: Presently, are aware an Installment Agreement is not the sole possibility for repaying your debt. If you aren't eligible, work with a tax specialist to discover if any of the above options are a fit for you.