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IRS Tax Notice CPA discusses IRS payment options: currently not collectible status, installment agreement and offer in compromise

IRS tax notice CPA

It’s better not to owe any IRS tax, but here are a few tips if you do. (399) 399-2705.

Even the best IRS tax Notice CPA can’t always bring your tax bill down to zero. I’ll cover three ways to settle with the IRS if you can’t pay them completely at the moment:

  • IRS Installment Agreement. Here the IRS sets up a monthly payment plan. I’ll discuss strategies below.
  • Form 656 Booklet, Offer in Compromise. The infamous penny on the dollar technique where the IRS accepts less than what you owe as full payment.
  • Currently not collectible status. Sort of an IRS limbo where you’re not paying anything, but the IRS stays poised to collect if your situation changes.

Ask For Penalty Abatement

IRS tax notice CPAs see huge penalties demanded by the IRS. Sometimes they’ll abate some of them. But you have to ask. I’ve never seen them forgive interest unless the tax liability decreases, say from submitting back tax returns. No form is required. We usually just write a letter.

IRS Installment Agreements

Use IRS Form 9465, Installment Agreement Request, to apply a monthly payment plan. The IRS automatically grants Installment Agreements on most tax bills although there’s a collection assessment form required if the amount exceeds $25,000. Sometimes they’ll go for 72 months.

Cons of Installment Agreements:

  • You’re paying your taxes unlike Currently not Collectible Status.
  • You’re paying your entire tax bill unlike the IRS Offer in Compromise.
  • You must stay current with your tax reporting obligations.
  • You must stay current with your ongoing IRS estimated tax payments.
  • Fees apply.
  • Interest applies.

“You don’t buy any IRS goodwill by paying more down payment or paying higher monthly payments. If you miss an IRS Installment Agreement payment, there are consequences.”
– Gary Bode, IRS tax notice CPA

 IRS Installment Agreement Strategies

  • Like any creditor, if you miss a few monthly payments there are consequences.
    • Remember you’re dealing with the most powerful creditor in the US.
  • Pay a low down payment.
  • Select a low monthly payment.
  • Don’t send them extra amounts unless you can pay them in full.
  • Save money on the side.
  • Pay them in full when your money saved allows it.

Currently not Collectible Status

  • Basically to qualify you must not have any ongoing income over the bare essentials of living.
  • You generally have no assets the IRS can seize.
  • The IRS pauses collections.
    • Sometimes for years.
  • Sometimes known as section 53.
  • Sometimes known as a hardship case.
  • There’s a collection assessment form required.
    • IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals.
    • IRS Form 433-F Collection Information Statement.
  • You don’t have to be current with your IRS reporting obligations. Strange but true.

Offer in Compromise

Here you pay less than what you owe and the IRS accepts it as payment in full. The offer in compromise has a colorful history including criminal charges against major “offer” mills that prowled on late night TV.  The IRS has an online pre-qualifier tool. My approach? We don’t charge for helping you with the qualifier.



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