Options for Resolving IRS Back Tax Debt

Very lately, IRS collections against individuals is heating up. Why? Well, there is the US "Tax Gap" (60% of gap is from individuals). While closing the tax gap won't completely pay off the Federal budget deficit, it is one tool that you'll see more in 2024 and beyond to balance the Federal budget.

If you owe the IRS or project to owe the IRS after you get into tax compliance: here's your options in order of your current financial situation.

Pay in Full - Pay the IRS in full by check or at irs.gov and seek penalty waiver for reasonable cause (RC)(multiple years)) or get First Time Abatement (FTA) (one year owed).

Owe Less Than $250,000 - You can enter into a streamline agreement and later seek penalty relief for RC or FTA.

Can Pay But Not Flush - You can get a tiered installment agreement by offering a lesser amount for a year and then agreeing to an increase. You will need to provide financials to make your case.

Have Assets But Can't Liquidate - Get a two year break from IRS collections by proving your financial indigence and then getting Currently Not Collectible.

Make a Deal - Yes, you can settle with the IRS. About 35% of WATAX clients do. You'll have to prove you can't pay more than the liquid value of your assets and show that your disposable income won't pay it either. Yep, this is called "Offer in Compromise."

Make a Deal For Unusual Circumstances - If you might have the financial ability to pay the IRS, barely, but it would be difficult to do. You can try to do Offer in Compromise for Effective Administration.