IRS Tax Debt Payment Options

What are my IRS Payment Options?


The IRS has several payment plan options to pay off tax debt. For example, if you are able to pay off the entire balance in a short period, you may qualify for a short-term payment arrangement. A short-term tax payment plan needs to be accepted by the IRS to avoid aggressive collection efforts like a Notice of Federal Tax Lien filing or an IRS levy.

Tax Debt Settlement Options

When people don’t have the resources or income to pay their IRS tax balance in full, the IRS is required to consider collection alternatives for the outstanding tax debt. There are a number of programs, but the following IRS programs are some of the most common settlement options that we use to resolve IRS tax debt:

  1. Offer-in-Compromise (OIC)

    There are three actual OIC programs. We explore the availability of each program for our clients, which includes the Doubt as to Liability OIC, the Doubt as to Collectability OIC, and the Effective Tax Administration OIC.

  2. Installment Agreements

    Although this option looks a lot like a payment plan, installment agreements allow individuals to make monthly payments to pay off their IRS debts. There are several types of installment agreements, for example the partial pay installment agreement allows taxpayers to make lower monthly payments to a total that is only partially of what they originally owed. Usually, the statute of limitations for collecting the tax debt will run out before the tax debts are fully paid. As a result, we consider the partial pay installment agreement to be a viable option for resolving tax debts.

  3. Innocent Spouse Relief (including Separation of Liability and Equitable Relief)

    These programs provide relief from tax that may be owed if a spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.

  4. Penalty Relief

    If a tax return was not filed or taxes were not paid due to extenuating circumstances, we can assist our clients with a request for the IRS to remove or reduce a tax penalty.

  5. Bankruptcy

    Most of the tax settlement options we employ are designed to avoid bankruptcy. We try to avoid bankruptcy for our clients due to the effect on their personal credit and there are usually better options for settling tax debt. Also, not all tax debt can be removed using a bankruptcy due to a set of rules and laws in the bankruptcy code. As a result, we always try to avoid this option if possible.

Why People Get Behind on Their Taxes

Every year people fall behind on paying their taxes. Often people fail to withhold enough income taxes or don’t pay estimated taxes to the IRS when their income rises. At times, people stop paying their taxes due to a catastrophic event in their life like an illness, the loss of a job, or the death of a loved one.

Unfortunately, most people discover their problems when their accountant prepares their income tax return. While panic often follows this discovery, we still have options for people that owe the IRS. While most people may only have a small tax balance due, we’ve even helped people that owe millions in tax debt. We have two major options for people that have tax debt.

The tax resolution and payment options available to people largely depends upon their income and whether they own assets. For people who have assets or disposable income, the best options are the IRS installment agreement options. An installment agreement is a payment plan that the IRS may grant to you – depending upon your circumstances. For some people, a settlement option may be available. These options may allow some or all of tax debt to be resolved without paying the full balance. These are tremendous programs that allow people to get a fresh start in their financial well-being.