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the worst thing you can do if you owe money
to uncle Sam is to simply do nothing. be
proactive and go in to battle with knowledge

on your side.

an Installment Agreement, which is your tax debt. This program is designed failing to make proper estimated tax

simply a monthly payment plan with to allow taxpayers who cannot afford to payments. Sometimes, the taxpayer
the IRS. Installment Agreements come pay their tax debt in full to settle their may have a good excuse as to why one

with pros and cons to consider. The taxes at a discounted rate. however, of those penalties should not be ap-
pros are rather straightforward: by en- you must qualify for an oIC by being in plied. The IRS will consider your good

tering into an Installment Agreement, current compliance with tax laws and excuse (which it refers to as “reason-
the IRS will essentially leave you alone by being unable to pay your outstand- able cause”) if the taxpayer “exercised

if you comply with the terms of the In- ing tax debt.
ordinary business care and prudence”
stallment Agreement. In other words, The oIC program is filled with many in handling his/her respective tax

they won’t levy your bank account
conditions and requirements, which obligations. other factors such as the
or garnish your wages if you do what cannot be fully addressed in this short taxpayer’s compliance history and reli-

you’re supposed to do. The IRS may article. The general process is that the ance on bad advice may also provide
still place a lien against your property, taxpayer can submit financial paper- grounds for the IRS to eliminate or re-

but liens may be avoided under certain work and an oIC application to the duce penalties that have been assessed
conditions. The cons of the Installment IRS in order for the IRS to determine against a taxpayer.

Agreement are primarily financial. You the taxpayer’s “reasonable collection for those who owe money for taxes,
will pay a setup fee (between $43 and potential” or “RCP.” The RCP is the dealing with the IRS doesn’t have to be

$105) for the privilege of having an In- amount the IRS believes it can squeeze a nightmare. The worst thing you can
stallment Agreement, and penalties and from you over a certain period of time. do if you owe money to uncle Sam is to

interest will continue to accrue on your for the privilege of submitting your simply do nothing. be proactive and go
outstanding balance owed. The Install- oIC for consideration to the IRS, the in to battle with knowledge on your side.

ment Agreement often ends up being taxpayer will pay a $150 application fee The three payment topics covered above
similar to a high-interest rate credit and either 20 percent of the taxpayer’s are not the only ways to lower and/or

card, and the taxpayers are usually bet- offered settlement amount or the first repay your tax debt, but they provide a
ter served by obtaining loans from third month’s payment amount. The oIC general overview of the most commonly

parties to satisfy their tax debt.
process is often lengthy and complex, used ways to handle tax debts. The
and I would urge you to consult with
sooner you take action to resolve your

Offer in Compromise
a qualified tax professional before tax debt, the sooner you can put the IRS
have you ever seen or heard one
determining whether the oIC is right in your rear-view mirror.

of those tax advertisements that says for you.
something similar to “let us settle your Norman McKellar is the founder of The McKellar Law Firm,

billion dollar tax debt for a nickel”? Penalty Abatement
PLLC, and the winner of multiple Cityview Top Attorney
While those advertisements can be The IRS is very fond of using penal- awards. His practice primarily deals with IRS tax resolutions

misleading, they do reference a pro- ties to punish taxpayers for anything and federal criminal defense. More information on his law
gram known as offer in Compromise from failing to timely file a tax return, irm can be found at www.HelpingClients.com, or follow him

(“oIC”), which may be able to reduce
to failing to pay a tax debt on time, to
on Twitter @McKellarLawFirm.

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