While it’s true that the Internal Revenue Service has a long reach when it comes to collecting taxes, particularly if you are delinquent on what you owe, it’s also true that they can only collect what you have. Even the IRS will work with individuals who show true desire to pay taxes, and one way you can work with the agency is through an installment agreement.
An installment agreement is a payment plan set up between taxpayers and the IRS. Usually, the plan involves paying back the entire amount of tax owed, plus penalties and interest, over an agreed upon amount of time. While individuals that owe moderately small amounts may set up installment agreements through forms or tax software, agreements become harder to negotiate when tax burdens are larger or there are delinquencies involved. Sometimes, having experienced help with such matters can mean the difference between getting an agreement and not getting one; third-party assistance might also help you negotiate a more favorable agreement.
Even more helpful than an installment agreement for individuals or businesses that owe a great deal of taxes is the offer in compromise. This situation works similar to negotiations with other types of creditors; if it is clear from a review of your financial information that you simply cannot pay what you owe, then the IRS will often take a payment for less than what you owe and call the debt paid. Before the IRS will agree to an offer in compromise, however, it conducts an in depth review of your finances. Since you don’t want that review to result in additional tax issues or questions, working with someone to manage the process and ensure your records are in order can be helpful.
These are just some of the tools you can use to manage your tax burden. Paying the IRS isn’t optional, but there are legal and financial tax options that can help reduce the stress and monetary burdens of the tax process.