Thousands of taxpayers find themselves unable to settle their debts with the government each year.
Being in debt to the government can be terrifying and stressful, but there are options.
The government is actually more lenient than most creditors when it comes to re-negotiating what you owe.
Although the details of what can be worked out will depend on your situation, understanding the generalities of what's possible can help you make a plan and succeed.
Installment Agreement This is the easiest to qualify for, but it also requires some degree of preparation.
Under this plan, you get IRS help by being permitted to pay the amount you owe over a longer period of time.
The idea is to convert it from one lump sum into a monthly payment, ultimately allowing the entire debt to be covered.
This isn't a forgiveness program: you will end up paying the full amount, but it will be spread out over a longer period which means you don't have to come up with the full cost immediately.
Generally speaking, payment via installment must be negotiated at the time that the initial tax forms are submitted.
It may be possible to negotiate it after the fact, but it benefits you to know ahead of time that you won't be able to pay, and then to send in as much money as possible to cover the largest portion of your debt.
Doing this not only shows good faith, but also allows you to avoid penalties and interest as much as possible.
Consult with an attorney, Enrolled Agent, or Certified Public Accountant for assistance.
Offer In Compromise An OIC is a well-known option, but qualifying for it can be very difficult.
It requires extensive scrutiny of the taxpayer's assets and is only an option of last resort after all others have been exhausted.
However, for those who do qualify, it can be a dramatically positive choice.
The reason is simple.
An accepted OIC allows you to settle for less than you actually owe.
That's an incredible benefit for you because it's essentially knocking some of your debt off the roster completely.
This is a powerful program, but it's also hard to get accepted into it.
You can in theory apply to it on your own, but that means sorting through complex and confusing regulations and instructions.
Many people prefer to obtain the guidance of a qualified professional during the process.
A Certified Public Accountant, Enrolled Agent, or lawyer can help you accomplish your goals and ensure that you're presenting your most compelling and accurate case to the IRS.
These are the only two official government programs that offer assistance with payments.
It is unlikely that any individual will be able to negotiate beyond these, and even if it is possible, obtaining a better result is rare.
If you are struggling with past-due payments to the government or are aware that you won't be able to pay your liability in the future, your best course of action is to be proactive, determine what can be done to get assistance, and then pursue that.