Resolving the Back Tax Debt: Choosing your Collection Alternative

Michelle Divan, EA
Michelle Divan, EA

Hi – Michelle Divan here.  I represent taxpayers in Denver, CO – and nationwide – who cannot pay their taxes or have back tax debt.  So…you’re ready to address your back tax debt?  Maybe you are able to pay it off in full – great!  Many times, the balance due has become so high with interest and penalties, that payment in full won’t happen in one payment.  There are collections alternatives: Installment Agreements, Offers-in-Compromise (OIC), or uncollectible status.  What is right for you?

Installment Agreements: An “installment agreement” is an agreement between the IRS and a taxpayer to allow the taxpayer to pay their back-tax debt in monthly payments. There are various forms of installment agreement, each of which has special rules.

Offers-in-Compromise: An “offer-in-compromise” is where the IRS accepts less than the total owed by a taxpayer to settle the outstanding tax debt.  While this sounds like the best option, there are several requirements a taxpayer must meet to be eligible for this alternative.

Uncollectible Status: If a taxpayer has no available equity in assets and his or her income is not sufficient to cover their IRS allowable expenses, the taxpayer would be deemed “uncollectible”, or “CNC” in tax-speak.  While this does not actually resolve the tax debt, it does keep the IRS from filing any tax liens or tax levy’s

Wondering what is right for you?  If you or someone you know is in this predicament, let’s get it taken care of!  You can reach me at 303-250-0122 or via email at [email protected].