You’re desperate for a solution to your tax debt. Two main options exist: the installment agreement and the offer in compromise (OIC). Each approach holds numerous advantages and challenges. Choosing between them can be confusing — and the wrong selection could set you up for a world of trouble. Keep the following considerations in mind as you proceed:
The Potential for Rejection
In most cases, taxpayers who try for installment agreements are able to set up plans for paying off their IRS debt over time. With the OIC program, however, the path forward may be less clear.
Rejection rates vary, but in general, over half of OIC applications are turned down in any given year. These stats may scare away those who would otherwise be excellent candidates.
Settling for Less Over Time
As the cliche claims, great risk can lead to great reward. This is certainly true when comparing installment agreements and offers in compromise. Not only do installments generally require you to cover the full value of your tax debt, they often are accompanied by significant interest or even penalties. Meanwhile, an accepted OIC could allow you to settle for far less than you actually owe.
Still not sure if you’re a better candidate for an installment agreement or an OIC? The experts at the Highland Tax Group can provide additional insight into your options for dealing with tax debt. Reach out at your earliest convenience to get started.