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When it comes to tax relief, qualifying taxpayers have various options. While many options are available, only the most common ones will be discussed here. The first option is an "IRS Offer in Compromise." The second option is an "IRS Payment Plan" (i.e., IRS Installment Agreement).
It is important to remember that these options are based on financial need; none of these options are guaranteed.
IRS Offer in Compromise
The IRS can settle your outstanding tax debt for pennies on the dollar. (This is known as an "Offer in Compromise"). As the Internal Revenue Code Section 7122 states: "We [IRS] will accept an Offer in Compromise when it is unlikely that we [IRS] can collect the full amount and the amount you offer reasonably reflects the collection potential..." An IRS Offer in Compromise is not guaranteed. Therefore, it is important to discuss the qualification requirements with your tax attorney CPA. Schedule your free consultation today.
IRS Payment Plan (i.e. IRS Installment Agreement)
An IRS Payment Plan can be created with the IRS to help you pay your outstanding tax debt. You are able to pay off your tax debt in monthly increments over a certain period of time. Once an IRS Payment Plan is in place, you will remain in good standing with the IRS so long as you continue making those payments.
"IRS Offer in Compromise" vs "IRS Payment Plan"
Each method is different related to its effect on the outstanding tax lien. With an "Offer in Compromise," any IRS tax liens filed against you are removed once the "Offer in Compromise" is accepted and the amount is paid. With a "Payment Plan," any IRS tax liens remain in full force and effect while all payments are being made. This is critical to remember, especially because IRS tax liens may have a negative effect on your financial well-being (i.e., your credit score and/or access to credit).