The IRS Offer in Compromise is Not the Only Option for Tax Debt

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Question: I know you’ve said not everyone qualifies for the Offer in Compromise. So be honest with me: I have tax debt, and if I don’t qualify for the Offer in Compromise, what are my options?

Answer: That’s a good question. The answer is, even if you do not qualify for the Offer in Compromise, you have options.

First of all, for readers who are unfamiliar, I should explain the Offer in Compromise. This is an IRS program created to allow the government to work with indebted taxpayers who cannot, for whatever reason, pay off their tax debt, even over time. For taxpayers who qualify for this program, the IRS will often agree to a compromised settlement amount — hence the name “Offer in Compromise” — that will do away with the debt once and for all, often for much less than you owe. But as the questioner accurately states, not everyone with tax debts qualifies for the program.

But as I said, there are other options. If you owe a substantial amount to the IRS, the first thing you should do is consult a qualified tax professional. He or she will review your previous years’ tax returns and determine exactly how much you owe. Oftentimes, this process can result in a substantial tax savings, and besides, why begin negotiations with the IRS claiming you owe more than you do?

Now, once you have your accurate debt amount in hand, you and your qualified tax professional can negotiate directly with the IRS. Besides the Offer in Compromise, one of the best programs is the Installment Agreement. This program is designed for taxpayers who owe a substantial sum but cannot pay off the debt immediately. In these cases, the taxpayer works out a monthly IRS payment plan with the IRS that allows for the debt to settled over time, without significantly affecting the lifestyle of the taxpayer. If your daughter is in college, for example, you don’t have to worry about pulling her out to pay the IRS.

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