Offer In Compromise or Installment Agreement – Part 2

In my last blog I stated that if the taxpayer does not qualify for an Offer in Compromise, then we look at an Installment Agreement that is intended to pay the debt in full by making equal monthly payments. However, sometimes the IRS will accept a payment amount that will not pay in full by the time the Statute of Limitations for collection (ten years from date of filing) expires.

If the taxpayer’s financial statement shows he can only pay a smaller amount that will not pay off the debt in time, the IRS has to accept it. However, if the taxpayer also has assets that can be liquidated to pay down a portion of the debt, the IRS sometimes requires him to liquidate that asset and apply it to the debt before approving the partial-pay Installment Agreement. Also, many times we can abate (i.e. convince the IRS to forgive) the penalties owed if the taxpayer has reasonable cause. However, the IRS will never abate the interest charges, which compound daily.