Sometimes taxpayers owe more money in taxes than they can afford to pay to the IRS. When this happens, you have the option to file an Offer in Compromise, which allows you to pay less than you owe. If you opt to pursue this route, here are some specific details you should know.
Affording the full debt amount. If you can afford to pay your full debt, you will, most likely, not qualify for an Offer in Compromise. Instead, you should pursue other options, such as setting up a payment plan with the IRS.
Filing all required tax materials. In order to apply for an Offer in Compromise, you must have filed all necessary tax paperwork with the IRS.
Making an initial payment toward your debt. The IRS may require you to pay an amount toward your owed taxes when you apply for Offer in Compromise. Any payments will apply to your debt.
You can find out if you qualify by using the IRS Offer in Compromise Pre-Qualifier Tool.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov[8]
[8] IRS.gov, June 12, 2020
