In 2010, more than 9 million taxpayers could not afford to pay what they owed to the IRS. Ray Martin, Special Contributor, CBS Moneywatch.com discusses IRS payment plans and income tax settlements.
Even if you can’t pay your taxes, you still have to find your tax return on time. If you owe under $25,000 you can complete and submit the Online Payment Agreement Application to the IRS. There’s a 120 day short-term extension and monthly payment plans for longer IRS settlements.
If you owe more than $25,000 you may still apply for an IRS payment plan. The process requires filing different tax forms and is can be handled by your taxpayer resolution specialist.
A third option is the Offer in Compromise. The Offer in Compromise is a government program that settles your tax debt for less than you owe if you qualify. This is used where there is legitimate doubt the taxpayer could ever pay the full amount owed, or paying the tax would create an economic hardship. Getting an Offer In Compromise is not easy! The IRS accepted only 21% of those offers remitted last year.
Whether is a short term extension, IRS payment plan or offer in compromise, having your taxpayer resolution professional on your side can help get you the best payment options available and your best chances of success.