5 Types of IRS Offers You Need to Know About

 




If you're struggling with IRS debt, it can feel overwhelming and stressful. However, there are options available to help you resolve your tax debt and move forward with your financial future. One of these options is an IRS offer, which comes in five different types. Learn more about these offers and how they can help you get back on track.

 

Offer in Compromise.

An Offer in Compromise (OIC) is one of the most well-known types of IRS offers. It allows taxpayers to settle their tax debt for less than the full amount owed. To qualify for an OIC, taxpayers must demonstrate that they are unable to pay their full tax debt, either through a lump sum payment or through a payment plan. The IRS will consider factors such as income, expenses, and asset equity when evaluating an OIC. It's important to note that not all taxpayers will qualify for an OIC, and it should only be pursued after consulting with a tax professional.

 

Installment Agreement.

An Installment Agreement is another type of IRS offer that allows taxpayers to pay their tax debt over time, rather than in a lump sum. This option is available to taxpayers who owe less than $50,000 in combined tax, penalties, and interest. Taxpayers can apply for an Installment Agreement online or by mail, and must make monthly payments until their debt is paid in full. It's important to note that interest and penalties will continue to accrue on the unpaid balance until it is fully paid off.

 

Partial Payment Installment Agreement.

A Partial Payment Installment Agreement (PPIA) is a type of IRS offer that allows taxpayers to pay a portion of their tax debt over time. This option is available to taxpayers who owe more than $50,000 in combined tax, penalties, and interest, or who cannot afford to make the monthly payments required under an Installment Agreement. To qualify for a PPIA, taxpayers must provide detailed financial information to the IRS and make monthly payments based on their ability to pay. The remaining balance of the tax debt is forgiven after the payment plan is completed, but interest and penalties will continue to accrue until the debt is paid in full.

 

Currently Not Collectible.

Currently Not Collectible (CNC) is a type of IRS offer that allows taxpayers to temporarily delay payment of their tax debt. This option is available to taxpayers who are experiencing financial hardship and cannot afford to make monthly payments or pay their tax debt in full. To qualify for CNC status, taxpayers must provide detailed financial information to the IRS and demonstrate that paying their tax debt would cause undue financial hardship. While the tax debt is still owed, the IRS will not take collection action against the taxpayer while they are in CNC status. However, interest and penalties will continue to accrue until the debt is paid in full or the statute of limitations on collection expires.

 

Penalty Abatement.

Penalty abatement is a type of IRS offer that allows taxpayers to request a reduction or elimination of penalties assessed on their tax debt. Penalties can be assessed for a variety of reasons, including failure to file, failure to pay, and accuracy-related issues. To qualify for penalty abatement, taxpayers must demonstrate reasonable cause for their failure to comply with tax laws or show that they were not aware of the requirements. This option can be particularly helpful for taxpayers who have a one-time issue that caused them to fall behind on their taxes.

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