If you or someone you care for has tax debt with the IRS, it’s natural to want to find a way to settle the debt as quickly and seamlessly as possible. In some cases, this involves making a one-time direct payment to the Internal Revenue Service. On the other hand, if you’re unable to pay what you owe, in full, at the time you get the bill, you may find yourself exploring payment plan options.
The IRS offers several flexible payment plan options, including short-term payment plans (which span between 90 and 180 days), and longer-term payment plan options are also available. The best way to establish an IRS payment plan is to contact the agency directly. This can be done by creating an account on the IRS website and clicking on the “payment plan” tab.
Recently, however, the IRS is sounding an alarm about “Offer-in-Compromise” mills. Simply put, an offer in compromise allows taxpayers to settle their tax debt for an amount that’s less than they owe. An OIC application is available via the IRS website. To qualify, the taxpayer must have filed all of their tax returns and be current on estimated tax payments for the current year (if applicable). If the taxpayer is a business owner (with one or more employees), they must be current on their quarterly tax payments. The qualifying criteria to get approved for an OIC is very strict, and according to IRS data, of the 62,000 applications they received in 2017, only 40% were accepted.
But that’s not to say that scammers aren’t misleading people about who can qualify. According to an IRS press release, “We’re increasingly concerned that people having trouble paying their taxes are being duped into misleading claims about settling their tax debts for ‘pennies on the dollar’,” said IRS Commissioner Chuck Rettig. “The IRS urges people to take a few minutes to review information on IRS.gov to see if they might be a good candidate for the program – and to avoid costly promoters who advertise on radio and television.” The advertisers often charge a hefty fee for their services, and some “program promoters” are inappropriately advising indebted taxpayers to file an OIC application with the IRS, even though they know the person won’t qualify.
If you have questions about how an OIC works or you have additional questions about whether you might qualify, be sure to review the IRS’ Offer in Compromise Pre-Qualifier Tool.