Which IRS.gov Payment Option is the One for You? Exploring the Offer in Compromise and Installment Agreement
Deciding on the right IRS Payment Option can be hard since are all so different. The best known options when seeking an IRS Payment Option for IRS debt are the Installment Agreement and the Offer in Compromise.
Installment Agreements allow a taxpayer that owes the IRS to pay back a debt via a set number of monthly payments. The most prominent method to satisfy IRS tax debt are these Installment Agreements. And the IRS is fine with that, when you take into consideration how much extra money this can make them at your expense. Read on if you want to know the facts about IRS Installment Plans.
Blowing hard-earned money paying the IRS every month with an Installment Agreement will start to seem like you're going nowhere. This is because the massive penalty fees and interest on what you owe the IRS still accumulate every month!
Are there any alternatives available? If you have no other choice, the Installment Payment Plan lets you pay back your IRS debt over a set amount of time by way of monthly payments. You may see it is costing you plenty in penalties and interest. Are there other options?
Is Paying in Full an Option for You? Most people absolutely can't pay in full, but if you're one of the fortunate few that can borrow from family, friends, or the bank to get this problem out of the way... what's the hold up? You could save a lot in penalty fees and interest by paying what you owe in full!
Credit Card: If the interest accruement on your credit card is a lot cheaper than IRS tax debt payments, and your credit card limit can cover it, use your credit card to pay the IRS. It usually is easier to work with MasterCard, American Express, Discover, Visa, etc. than with www.IRS.gov. Unlike the IRS, your creditors are not likely to issue a Tax Lien or levy your wages. Be aware that, if you use your credit card to pay your debt, the IRS will note the amount you "saved" as "income." A nasty business practice, but they do it!
Offer in Compromise (OIC): Very few Americans will be considered for an OIC. However, you could be accepted for an Offer in Compromise (OIC) if you meet any of the following three specifications.
- Can not pay: If you are unable to cover your debt completely before the 10 year statute of limitations is over, you may qualify for an Offer. The IRS will look closely at your ability to pay off your tax debt, even taking in consideration factors such as age and health.
- Uncertainty as to Liability: You may qualify if you are not liable for the IRS tax debt. You should be prepared to show that you're not accountable for the IRS debt estimated.
- Hardship: If a sudden disaster is stopping you from going to work (ex: handicapped, disability, etc.), you might be considered for an Offer in Compromise.
Save yourself lots of money by decreasing the amount that you owe the IRS with an Offer agreement. In addition, this takes care of the IRS tax debt in one swift motion.
Currently Not Collectible: The IRS may agree to a temporary or permanent pardon from its collection proceedings, depending on the severity of your hardship circumstances. If you can't pay, you cannot pay.
Looking for Assistance: Presently, are aware an Installment Agreement isn't the sole option for repaying your tax debt. If you don't qualify, consider consulting with a tax specialist and see if any of the above options will resolve your tax issues.