Tax Debt Resolution


Settling tax debt isn’t easy; you need somewhere to begin. Agencies explain the complicated process and recommend not to start without consulting a professional. However, deciding between an agreement for installment or an offer in compromise isn’t as complex as it may seem. After learning the details of both processes, taxpayers can usually decide what works best for them. Each process has its pros and cons.

Offer in Compromise

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One of the main reasons people choose an Offer in Compromise as a settlement option is the completion of their tax liability. The entire tax debt is paid once the IRS accepts the offer and payment is made in full. There is no hassle of keeping up with monthly installments.

If your tax debt is secured through the IRS with a lien on a property you own, the Offer in Compromise can clear that up. All you need to do is file a lien withdrawal. This may be a solid reason to pursue an Offer In Compromise. However, the importance of this reason varies from individual to individual, depending on their financial situation.

Even if your Offer in Compromise is rejected, you can still pursue an installment agreement. If the IRS accepts your Offer in Compromise, you would have to pay less than your total debt, which might seem attractive to some people.


Rejection is why an Offer in Compromise isn’t seen as a dependable option. The IRS often rejects applications because of the financials of the applying individual. Several applications are turned down because many tax relief agencies send applications even if they know they have zero chance of being accepted.

Liquidation of Assets

The IRS might expect you to liquidate your assets to come close to the amount you owe. They can also file a federal tax lien against your property while your Offer In Compromise status remains pending. If you already have liens, it might not be a big issue. It also isn’t very common, but can be a possibility. 

Installment Agreement

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The benefits of installment agreements usually come where the disadvantages of the offer-in-compromise end. The first big advantage of an Installment Agreement is, usually, not having to liquidate your assets. Plus, the monthly installments in this plan can be extremely low. The total amount you end up paying can even be lower than what you owe currently, as debt that ages to more than ten years becomes uncollectible. You can check out the particular dates for the Collection Statute Expiration.

Another advantage of an Installment Agreement is the acceptance rate. It is much easier to get a Partial Pay Installment Agreement accepted than it is to get an accepted Offer in Compromise.


The IRS can review your financial situation every 24 months in the Partial Pay Installment Agreement. Acquisition of new assets and boosts in income can lead to the IRS increasing your monthly payments.

The second disadvantage of the Partial Pay Installment Agreement is the presence of tax liens. The IRS won’t lift those liens as they do in the Offer in Compromise. Moreover, the existence of liens can affect your ability to obtain loans.

Filing Process

The forms to file an Offer In Compromise and Partial Pay Installment Agreement differ. However, the required information is pretty much the same. The IRS will require full disclosure of incomeassets, and expenses in each tax debt settlement method. However, in the Offer in Compromise, there is only a one-time disclosure compared to the Partial Pay Installment Agreement, where disclosure is scheduled every two years.

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The IRS prefers that people with tax debt apply for a Partial Pay Installment Agreement rather than an Offer in Compromise. The reason for this is the ability of the IRS to collect more of the tax debt because they expect the person to be in a better financial situation in the future. The recommended route is to consult a professional bookkeeper or CPA about your financial status. Try to file for an Offer In Compromise if the professional recommends it. If you don’t file an Offer in Compromise or if it is rejected, you can file for a Partial Pay Installment Agreement.

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