When you have past due federal income taxes and wish to resolve this issue, you need professional advice regarding your payment options. To set up either an offer and compromise or a payment plan the IRS will want financial information regarding your income and assets to determine what the IRS believes they can reasonably collect. If the amount is not too high and you a can satisfy the debt quickly then a payment plan is a good option. If you owe a lot of money and the amount you can afford to send will not pay the debt quickly, I would recommend making an Offer in Compromise.
In an Offer in Compromise you can either pay a lump sum or over time. If you enter an installment agreement interest continues to add up and you may not ever pay off the IRS debt. An Offer in Compromise may be a better deal since you will have an end date for your payments. If you intend to file bankruptcy to discharge the IRS debt, it may be in your best interests to make a payment arrangements until such time as you can file bankruptcy to discharge the debt.
You most likely will need professional advice to figure out the best choice to make to resolve your IRS problem.
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