I owe the IRS more money than I can pay. What are my options?
When you cannot full-pay your federal tax debt within 180
days of the date of the first billing notice, many dealings with the
IRS will begin with an analysis of your income and certain allowable
expenses from which the IRS will determine the amount of monthly income
available to pay your total federal tax debt. This process takes into
account monthly income & expenses and the equity in the taxpayer’s
assets. The outcome of the income analysis will include one or more of the following possibilities: Installment agreement. If
there is positive monthly income & IRS can collect the full balance
due from monthly payments they will insist on an installment agreement
with those terms.There are three variations of installment agreements do not require submission of financial information:
Offer in compromise. An
offer in compromise is feasible if you are only able to pay an amount
that is less then the total yu owe. That mount is a combination of the
equity you have in your assets, valued at 80% of fair market value,
plus a multiple of your monthly income available to pay federal tax
debts (see above). Important. The offer in compromise process is usually not a negotiation where the "bird-in-the-hand" concept might apply. |