Question: If I am not eligible for the Offer in Compromise program, can I enroll an Installment Agreement? And if so, how does it work?

Answer:  The answer: Yes.

The Offer in Compromise program is for taxpayers who, for whatever reason, have amassed a tax debt that they cannot pay under any circumstance. Taxpayers who do qualify for the program can have their tax debt reduced by pennies on the dollar.

However, there are strict criteria for qualification and some people who have tax problems may not qualify for the program. For these taxpayers, there is the Installment Agreement.

It’s pretty simple: For taxpayers who have tax debt that they cannot afford to pay off with a single check, the Installment Agreement is available. It allows taxpayers to pay off their tax debt over time by making monthly payments to the IRS that work similarly to a car payment or mortgage. The idea is to allow American taxpayers to pay off their debt without forcing them to lose their homes or pull their children out of college.

After years of chasing deadbeat taxpayers with little success, the IRS discovered that gentler programs such as the Installment Agreement can actually be more effective than hard-nosed tactics.

You may indeed qualify for the Installment Agreement. To find out, the first thing you should do is consult a qualified tax professional. He or she will analyze your returns to determine exactly what you owe and then set up a meeting with an IRS agent to discuss your case.

More Tax Help, IRS News and Tax Relief Tips:

1. Since the New Year has rolled around, I’ve made myself a promise: I want to get rid of my tax debt. I owe about $140,000 in back taxes and now earn about $65,000 per year (with no savings). I don’t know where to begin. Can you help?
2. I’ve seen picket signs on the side of the road. I’ve heard of all the scams, and I’m not a sucker. I would never fall for one of those scams. In fact, I’ve never wanted to not pay the IRS. I wish it were as simple as not wanting to pay. As an independent contractor, I’ve made a substantial amount of money over the years. But owing to some bad tax advice, I’m in a bind. I’ve amassed a huge debt to the IRS and I recently lost my biggest client. I don’t know how I’ll pay the tax debt. What can I do?
3. What’s the difference between an Installment Agreement and an Offer in Compromise?
4. Ask the Tax Resolution Expert - Do I Qualify for the IRS Offer in Compromise Plan or Participating in the IRS Installment Agreement Payment Plan?
5. Ask the Tax Resolution Expert: The IRS Offer in Compromise or Installment Agreement Programs May Be Your Tax Debt Solution

Tags: Installment Agreement, Offer in Compromise, Offer in Compromise program, PIC

This entry was posted on Thursday, December 6th, 2007 at 5:14 pm and is filed under IRS Installment Agreements, IRS Question Corner, IRS Times and Inquirer, Offers in Compromise. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.