Installment Agreement By negotiating
an Installment Agreement (IA) with
the IRS, you can repay all, or part,
of your total back tax liability
through manageable monthly payments.
The specific monthly payment is
based upon how much you owe and
how much you can afford to pay.
However, negotiating your payment
will require a full disclosure of
your and your spouse's financial
information. Additionally, as with
all IRS tax relief programs, you
can only enter into an agreement
if you have filed all your necessary
federal income tax returns.
Full Payment The fastest way
to resolve owed back taxes is by
paying them in full. This includes
paying the interest and penalties
that have been assessed by the IRS
back. These penalties and interest
can quickly add thousands of dollars
to your tax liability as they are
constantly accruing. If you intend
to fully repay the IRS then you
should try to do so as soon as possible
to avoid additional expenses.
Streamlined Installment Agreement
This is a special type of Installment
Agreement. Again, the Streamlined
Installment Agreement (SIA) is just
a monthly payment paid to the IRS
to address your back tax liability.
The difference is how it is calculated.
An IA is based upon a comparison
of income to expenses. An SIA is
based upon how much you owe. So
long as you owe less than $25,000
and the tax liability will not expire
in less than five years, you qualify
for this payment plan.
Offer in Compromise The final
settlement program offered by the
IRS is an Offer in Compromise (OIC).
With an OIC you submit an offer
to the IRS detailing what you can
afford to pay in a lump sump. If
the IRS accepts then by submitting
payment you will resolve your tax
debts. However, submitting an OIC
requires disclosure of extensive
financial information in order to
prove that you could not repay your
taxes fully over the next 4 or 5
years even if the IRS forced the
sale of all assets that you currently
own.
Placement on CNC Status If you
cannot afford to pay on your IRS
back taxes at all, then you might
qualify for placement on the IRS'
Currently Not Collectible (CNC)
status. However, you will need to
prove to the IRS that your monthly
necessary living expenses exceed
your monthly income.
Innocent Spouse This is a very
limited form of tax debt resolution.
It is only applicable when one's
spouse files a joint tax return
which accrues a tax liability without
any knowledge on the part of the
other spouse of what caused the
underlying IRS tax liability. Although
it is very limited, it is one in
the best forms of tax debt resolution
because it completely eliminates
the debt, interest, and penalties
from the innocent spouse's IRS account.
However, the "non-innocent" spouse
still needs to seek a different
form of resolution.
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