It's hard to pick the right IRS Payment Option, as they are all so different. The best known choices when deciding on an IRS Payment Option for IRS tax debt are the Installment Agreement and the Offer in Compromise.
Using an Installment Agreement, a taxpayer who is in debt to the IRS can repay a debt by way of a set amount of monthly payments. The most popular tactic to pay off IRS tax debt are these Installment Agreements. This is just fine by the IRS, taking into account how much profit this can make them at your expense. Let us reveal the shocking truth about IRS Installment Agreements.
Throwing away your hard-earned money paying the IRS every 30 days via an Installment Agreement may begin to seem like you aren't getting anywhere because, the massive interest and penalties on the amount you owe the IRS still stack up monthly!
Do I have any alternatives available?
If you have no other options, the Installment Payment Plan give you the option to pay off what you owe over a predetermined amount of time using payments each month. However, you must realize it's costing you a hefty amount in interest and penalty fees. What other options are available?
Paying in Full
Most individuals absolutely can not pay in full, but if you are fortunate enough that you are able to borrow from loved ones or financial institution to get this problem out of the way... what are you waiting for? You could save money by paying what you owe in full!
Credit Card
If the interest rate on your credit card is much less than payments to the IRS, and your credit limit can handle it, use your credit card to pay the IRS tax debt. It may be easier to deal with MasterCard, American Express, Discover, Visa, etc. than with the IRS. Unlike the IRS, your credit card companies are less likely to issue a Tax Lien or levy your assets. But remember, if you pay in full with your credit cards, the IRS will see the amount of money you saved as "income." A potentially unethical scheme, but they do it!
Offer in Compromise (OIC)
Few tax payers will be considered for an Offer in Compromise (OIC). However, you might be accepted for an Offer in Compromise should you meet any of the below points.
- Unable to Pay: If you are unable to satisfy your debt in total before the 10 year statute of limitations runs out, you might be eligible for an OIC. The IRS will examine your ability to make payments, even considering factors such as heath and age.
- Doubt as to Liability: If you are not liable for the IRS tax debt, you may be eligible. Be prepared to show that you're not responsible for the IRS debt estimated.
- Economic Hardship: You could be considered for an OIC if a unavoidable affliction is preventing you from going to work (ex: handicapped, accident, etc.).
Save yourself big bucks by decreasing the total amount that you owe the IRS with an Offer program. In addition, this takes care of the debt completely.
Currently Not Collectible
The IRS might agree to a temporary or permanent exemption from its collection proceedings, depending on how bad your hardship circumstances are. If you can't pay, you cannot pay.
Seeking Assistance
Now you've learned that when you need to repay your debt, an Installment Agreement is not your sole option. If you aren't eligible, think about speaking with a tax expert to see if any of the alternatives above will resolve your tax dilemmas.
