Clients should always be encouraged to file their returns on time and pay as much of the balance due as possible, but those that cannot pay in full are not out of options. Changes the IRS has made as part of its “Fresh Start” initiative over the past two years have made it easier for taxpayers to qualify for alternative payment programs. Ignoring a tax bill is never a good option, and the Fresh Start changes should provide a good incentive for taxpayers to work with the IRS to resolve past due taxes.
If a client is unable to pay in full, Sec. 6159 allows the IRS to enter into a monthly payment plan (installment agreement). The IRS also has the authority to settle the tax, penalties, and interest by negotiating an offer in compromise (OIC). This is a contract between the taxpayer and the government to settle the tax debt for less than the full amount owed.
Moore Bookkeeping 