From Carol McAtee’s CPA firm in St. Petersburg, FL –The IRS offers a few options if a taxpayer cannot pay the full amount of their tax liability for the year; either the option to pay it off over time or to reduce the amount of the outstanding liability. As tax professionals, McAtee & Associates can help taxpayers with unresolved tax liabilities with the two options discussed below.
For taxpayers who are not able to pay in full by the return filing deadline, an installment agreement may be appropriate. We can file the necessary forms with the IRS to request that a taxpayer be put on an installment plan. Payments are made monthly, generally over a period of five years or less. Taxpayers can pay the balance in full at anytime.
A taxpayer may also consider an Offer in Compromise which is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liability for less than the full amount owed. It is subject to acceptance based on legal requirements. Generally, the IRS will not accept an Offer in Compromise if they believe the amount owed can be paid in full as a lump sum or through a payment agreement. Prior to approval, the IRS examines the taxpayer’s income an assets to determine their ability to pay.
The IRS has recently expanded the Offer in Compromise program to include taxpayers with annual incomes up to $100,000 and outstanding tax liabilities up to $50,000. If taxpayers meet certain income and asset requirements, they may be able to compromise their tax liability with the IRS by making an Offer in Compromise.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.