You qualified for an IRS payment plan, such as an installment agreement, to pay a tax debt you could not remit in full. But now, you want to renegotiate the terms of that plan. What are your options? The steps to take depend on the nature of the changes you want to make, the total debt you owe, and whether the payment plan is for an individual or a business.
First, and most importantly, to avoid any penalties, continue to abide by the terms of your existing payment plan until the IRS has approved new terms.
The IRS Online Payment Agreement Tool
Many basic changes in your payment plan can be made through the Online Payment Agreement tool on the IRS website. These include changing the monthly payment amount or due date, converting your existing agreement to a Direct Debit agreement, changing your banking details on a Direct Debit agreement, or reinstating your payment plan after a default. You may need to complete additional forms regarding your assets and business if the amount you want to pay falls below the minimum required.
Offer in Compromise (OIC)
If you meet the eligibility requirements, this option allows you to pay less than the full tax debt you owe. The IRS agrees to an OIC if you can substantiate that you cannot pay the amount you owe even within an extended period.
Currently Not Collectible (CNC)
Also known as hardship status, this designation is applied to taxpayers who demonstrate that their monthly income is insufficient to cover their necessary living expenses and tax debt. It does not erase the tax debt, however; collection efforts are paused, but interest continues to accrue, and the IRS periodically reassesses the taxpayer’s financial information with a goal to resume payment.
Renegotiating your payment plan terms with the IRS can seem complicated, but a seasoned tax professional can clarify the process. The experts at Highland Tax Resolution have decades of experience advising clients on crafting the best strategy for negotiating with the IRS, and we can help you navigate this challenge successfully.