Can I negotiate my old tax debt with the IRS?
Owing money to the Internal Revenue Service (IRS) can result in a hefty amount of stress, especially if you're unable to quickly pay off what's owed. After all, any old IRS debt that you're carrying can come with hefty penalties, accumulating interest and the potential for wage garnishments or bank levies. For example, the IRS assessed more than $25.6 billion in additional taxes on returns that were not filed timely and collected almost $2.8 billion with delinquent returns in 2023 — a clear indicator of how expensive these types of fees and penalties can be.
But despite how stressful and expensive delinquent tax debt can be, it's an issue that millions of Americans deal with each year. If you're one of them, it's important to try and find a solution to your overdue tax debt as soon as possible. Otherwise, the extra charges tacked on by the IRS could further exacerbate the situation. What options do you have if you can't afford to pay the full amount that's owed to the IRS, though? Is there room for negotiation, or does the IRS expect you to pay back every penny that's owed on your old tax debt?
Learn more about your tax relief options today.
Can I negotiate my old tax debt with the IRS?
The short answer is yes, you generally do have the option to negotiate your old tax debt with the IRS. In fact, the IRS understands that not everyone can pay their full tax bill and offers several programs to help taxpayers find a manageable solution. Each option has specific eligibility requirements and implications for your tax situation.
The most common option is an Offer in Compromise (OIC), which allows you to settle your tax debt for less than the full amount owed. When evaluating an OIC, the IRS considers your ability to pay, income, expenses and asset equity and will generally accept an offer if it represents the most they can expect to collect within a reasonable time.
If you don't qualify for an OIC but can afford monthly payments, you might consider utilizing one of the installment agreements offered by the IRS, which lets you pay your tax debt over time. This keeps the IRS from taking further aggressive collection actions and also makes your debt more manageable.
Another potential option is to have the IRS place your account in Currently Not Collectible (CNC) status, which is also known as the IRS hardship program. CNC status temporarily stops the IRS' collection efforts, and it typically works best if you're in a financial situation where you can't pay anything at all. While CNC status doesn't eliminate your debt, it can provide a temporary respite from your taxes until your finances improve.
Working with the IRS on a penalty abatement is another option. If your tax debt has ballooned due to penalties, you may qualify for this option, which removes certain penalties if you can demonstrate reasonable cause, such as a serious illness or a natural disaster.
Chat with a tax relief specialist about your options now.
Why using a tax relief service is often the best option
While there are options to consider when dealing with old IRS debt, it's important to understand that negotiating with the IRS generally requires a thorough understanding of the eligibility requirements, the financial disclosures and proper documentation. Many taxpayers attempt to negotiate on their own, only to be denied due to missing paperwork or misunderstandings of IRS policies.
This is where tax relief services come in. These companies specialize in helping taxpayers navigate negotiations, increasing the likelihood of getting approved for a favorable resolution. Here's why working with a tax relief professional could be the best route for getting rid of your old tax debt:
- Expert knowledge – Tax professionals understand IRS rules and know how to present your financial situation in a way that maximizes your chances of qualifying for relief.
- Time savings – The paperwork and back-and-forth communication with the IRS can result in a drawn-out, time-consuming process. A tax relief service handles all of this for you.
- Better outcomes – The professionals employed by tax relief services know how to negotiate effectively and may secure lower settlements, better payment terms or other benefits you might miss on your own.
- No costly mistakes – Many taxpayers make errors when filling out IRS forms or fail to provide necessary documentation, leading to delays or denials. A tax relief service helps ensure everything is done correctly the first time.
The bottom line
Negotiating old tax debt with the IRS is possible, but it requires understanding your options and navigating a complex process. While some people successfully manage negotiations on their own, many find it beneficial to seek professional help during the process. Tax relief services can make these negotiations smoother, improve your chances of success and reduce the stress of dealing with the IRS on your own. But whatever path you choose, if you're struggling with old tax debt, don't wait. Weigh your options today, determine which one may be best for you and take the first step toward financial relief.
