What to Do If You Owe the IRS – Payment Plans & Settlement Options
Grant E. Allen, MSA, IRS Enrolled Agent
Partner - The Kaizen Group, LLP | Adjunct Professor of Accounting
With 25+ years in financial and business consultation, I’ve worked with countless entrepreneurs and business professionals who panic when they owe the IRS. But here’s the truth—owing taxes isn’t the problem; ignoring them is. The IRS offers several payment plans and settlement options to help taxpayers manage their obligations without financial strain. Let’s break them down.
1. Don’t Ignore the IRS—Take Action Immediately
If you owe taxes, the worst thing you can do is nothing. The IRS imposes penalties and interest on unpaid balances, making the debt grow faster than expected. The sooner you address it, the more options you’ll have to resolve it efficiently.
2. Installment Agreements: Spreading Out Payments
For those who can’t pay in full, the IRS offers installment agreements, allowing taxpayers to pay over time. If you owe less than $50,000, you can apply online for a long-term payment plan, making monthly payments more manageable.
3. Offer in Compromise: Settle for Less Than You Owe
An Offer in Compromise (OIC) allows taxpayers to settle their tax debt for less than the full amount owed. The IRS considers your income, expenses, and ability to pay, and if you qualify, you could significantly reduce your tax liability.
4. Currently Not Collectible Status: A Temporary Pause on Payments
If paying your tax debt would cause serious financial hardship, the IRS may place you in Currently Not Collectible (CNC) status, temporarily pausing collection efforts until your financial situation improves.
5. Work with a Tax Professional: The Right Strategy Matters
The IRS process is complex, and the right tax professional can help negotiate better terms, ensure compliance, and protect your financial future. If you owe the IRS, having a plan is essential.
Final Thoughts
Owing the IRS doesn’t have to be overwhelming. Installment plans, settlements, and financial hardship options provide solutions for managing tax debt effectively. The key is taking action early.
Have you or your business ever faced IRS tax debt? What strategy worked best for you? Let’s discuss in the comments!
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1 天前This is such an important message! Too many people freeze up when they owe the IRS, but taking action is key. Payment plans and settlement options exist for a reason, and with the right strategy, you can regain control of your finances. Great reminder that there’s always a solution—just need to take the first step! ????