Can I Settle My Taxes for Less Than I Owe?

If you owe money to the IRS, it is very important for you to fully understand how tax settlement works. A tax settlement allows you to pay less money than what you actually owe. To determine whether your unique situation qualifies you for an IRS tax settlement, you must understand the details of a tax settlement, under what circumstances the IRS will agree to it, and how to begin the process.

What Are My Tax Settlement Options?

A tax settlement works in one of two ways: the IRS will either agree to let you pay less than your total tax bill or give you the opportunity to pay back your tax debt over time via an installment agreement. Both options enable you to avoid paying your full tax liability back in one lump sum.

Paying less than what you owe is clearly the better of the two options since it means keeping more of your money; however, the IRS only agrees to this type of settlement when there are absolutely no other options and if you have proven that you are in truly poor financial shape.

Option 1: Offer in Compromise

The most commonly attempted method of settling your tax bill for less is through offer in compromise, the process of offering the IRS less than what you owe in hopes of a settlement. Unfortunately, offer in compromise is the least effective means of reaching such an agreement. The IRS has little incentive to settle since it will mean less money for them, so they will do whatever is possible to find an alternate solution that works for both parties.

For an offer in compromise to be accepted, you must offer the IRS a certain amount of money, while also convincing them that the proposed amount is the maximum that you can possibly afford given your financial situation. Proving that you are qualified for an offer in compromise is no easy task, but there is no harm in filing the proper paperwork in an attempt to convince the IRS of your eligibility.

Option 2: Installment Agreement

The other tax settlement option - an installment agreement - does not allow you to settle your taxes for less than you owe. You are instead agreeing to pay in full plus interest, but the IRS is letting you do so over a period spanning from several months to several years instead of all at once.

Get Help Settling Your Tax Debt

When attempting to settle taxes for less it is strongly recommended that you work with a tax professional to handle your filings. A quality tax professional will analyze your financial situation and find the most ideal settlement method for you. Request a free tax consultation from one of our expert tax specialists to determine the tax settlement type that you are most likely to qualify for.

Back Taxes Frequently Asked Questions
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IRS Tax Settlement
Find information about the options available to taxpayers who need to settle taxes owed with the IRS.

Tax Settlement Help
Our tax team is comprised of tax attorneys, tax lawyers, CPAs and IRS agents who can help you find the best tax settlement method for your individual situation.

Offer In Compromise Help
If you need help preparing an offer in compromise, our team of tax experts can ensure you proper filing and greatly increased likelihood of acceptance by the IRS.

IRS Payment Plans
The IRS offers payment plans that allow taxpayers to pay off the taxes they owe in a given period of time, depending on the situation.

Paying Back Taxes
There are several methods of paying past-due taxes and dissolving your tax liability. Our tax team can help you determine which approach is best for you.