Consumer Tax Defenders

• Ability to pay;
• Income;
• Expenses; and
• Asset equity.

The IRS will generally approve an offer in compromise when the amount offered represents the most they can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone.

Make Sure You Are Eligible

Also know, the IRS will return any newly filed Offer in Compromise (OIC) application if you have not filed all required tax returns and have not made any required estimated payments. Any application fee included with the OIC will also be returned. Any initial payment required with the returned application will be applied to reduce your balance due. This policy does not apply to current year tax returns if there is a valid extension on file.

You are not eligible if you are in an open bankruptcy proceeding. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal.

Submit Your Application

Find forms for submitting an application and step-by-step instructions in Form 656-B, Offer in Compromise Booklet PDF. Your completed offer package will include:

• Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
• Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
• $205 application fee (non-refundable); and
• Initial payment (non-refundable) for each Form 656.

Select A Payment Option

Your initial payment will vary based on your offer and the payment option you choose:

• Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. If your offer is accepted, you will receive written confirmation. Any remaining balance due on the offer is paid in five or fewer payments.
• Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.

Understand The Process

While your offer is being evaluated:

• Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
• A Notice of Federal Tax Lien may be filed;
• Other collection activities are suspended;
• The legal assessment and collection period is extended;
• Make all required payments associated with your offer;
• You are not required to make payments on an existing installment agreement; and
• Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.

If Your Offer Is Accepted

• You must meet all the Offer Terms listed in Section 7 of Form 656, including filing all required tax returns and making all payments;
• Any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt;
• Federal tax liens are not released until your offer terms are satisfied; and
• Certain offer information is available for public review by requesting a copy of a public inspection file.

If Your Offer Is Rejected

• You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 PDF.
• The IRS Independent Office of Appeals provides additional assistance on appealing your rejected offer.

After the levy proceeds have been sent to the IRS, you may file a claim to have them returned to you. You may also appeal the denial by the IRS of your request to have levied property returned to you. For a full explanation of your appeal rights, see Publication 1660, Collection Appeal Rights PDF (PDF).

The IRS is required to release a levy if it determines that:

• You paid the amount you owe,
• The period for collection ended prior to the levy being issued,
• Releasing the levy will help you pay your taxes,
• You enter into an Installment Agreement and the terms of the agreement don’t allow for the levy to continue,
• The levy creates an economic hardship, meaning the IRS has determined the levy prevents you from meeting basic, reasonable living expenses, or
• The value of the property is more than the amount owed and releasing the levy will not hinder our ability to collect the amount owed.

Please note: The release of a levy does not mean you don’t have to pay the balance due. You must still make arrangements with the IRS to resolve your tax debt or a levy may be reissued.

For more information, see Publication 594, The IRS Collection Process PDF (PDF).

There’s also a penalty for failure to file a tax return, so you should file timely even if you can’t pay your balance in full. It’s always in your best interest to pay in full as soon as you can to minimize the additional charges.

Benefits

• Avoid accruing additional interest and penalties
• Avoid offset of your future refunds
• Avoid issues obtaining loans

If you can’t pay the full amount due, pay as much as you can and visit IRS.gov/payments to consider our online payment options.

What is a payment plan?

A payment plan is an agreement with the IRS to pay the taxes you owe within an extended timeframe. You should request a payment plan if you believe you will be able to pay your taxes in full within the extended time frame. If you qualify for a short-term payment plan you will not be liable for a user fee. Not paying your taxes when they are due may cause the filing of a Notice of Federal Tax Lien and/or an IRS levy action. See Publication 594, The IRS Collection Process PDF.

What are payment plan costs and fees?

If the IRS approves your payment plan (installment agreement), one of the following fees will be added to your tax bill. Changes to user fees are effective for installment agreements entered into on or after April 10, 2018. For individuals, balances over $25,000 must be paid by Direct Debit. For businesses, balances over $10,000 must be paid by Direct Debit.

Apply online through the Online Payment Agreement tool or apply by phone or by mail by submitting Form 9465, Installment Agreement Request.

Note: If making a debit/credit card payment, processing fees apply. Processing fees go to a payment processor and limits apply.

Why do I owe interest and penalties?

Interest and some penalty charges continue to be added to the amount you owe until the balance is paid in full. Learn more about penalties and interest.

Why do I have to pay a setup fee?

The Office of Management and Budget has directed federal agencies to charge user fees for services such as the Installment Agreement program. The IRS utilizes the user fees to cover the cost of processing installment agreements.

Am I eligible for a waiver or reimbursement of the user fee?

Waiver or reimbursement of the user fees only applies to individual taxpayers with adjusted gross income, as determined for the most recent year for which such information is available, at or below 250% of the applicable federal poverty level (low-income taxpayers) that enter into long-term payment plans (installment agreements) on or after April 10, 2018. If you are a low-income taxpayer, the user fee is waived if you agree to make electronic debit payments by entering into a Direct Debit Installment Agreement (DDIA). If you are a low-income taxpayer but are unable to make electronic debit payments by entering into a DDIA, you will be reimbursed the user fee upon the completion of the installment agreement. If the IRS system identifies you as a low-income taxpayer, then the Online Payment Agreement tool will automatically reflect the applicable fee.

How do I determine if I qualify for Low Income Taxpayer Status?

If you believe that you meet the requirements for low income taxpayer status, but the IRS did not identify you as a low-income taxpayer, please review Form 13844: Application for Reduced User Fee for Installment Agreements PDF for guidance. Applicants should submit the form to the IRS within 30 days from the date of their installment agreement acceptance letter to request the IRS to reconsider their status.

Internal Revenue Service
PO Box 219236, Stop 5050
Kansas City, MO 64121-9236

How do I check my balance and payment history?

Individuals can view the current amount owed and payment history by viewing your Online Account. Viewing your tax account requires identity authorization with security checks. Viewing your tax account requires identity authorization with security checks. Allow one to three weeks (three weeks for non-electronic payments) for a recent payment to be credited to your account.

Am I eligible to apply online for a payment plan?

Your specific tax situation will determine which payment options are available to you. Payment options include full payment, short-term payment plan (paying in 180 days or less) or a long-term payment plan (installment agreement) (paying monthly).

If you are an individual, you may qualify to apply online if:

• Long-term payment plan (installment agreement): You owe $50,000 or less in combined tax, penalties and interest, and filed all required returns.
• Short-term payment plan: You owe less than $100,000 in combined tax, penalties and interest.

If you are a business, you may qualify to apply online if:

• Long-term payment plan (installment agreement): You have filed all required returns and owe $25,000 or less in combined tax, penalties, and interest.

Lastly, sole proprietors or independent contractors, apply for a payment plan as an individual.

What are the browser requirements of the Online Payment Agreement tool?

OPA is supported on current versions of the following browsers:

• Google Chrome
• Internet Explorer or Microsoft Edge
• Mozilla Firefox
• Safari

In order to use this application, your browser must be configured to accept session cookies. Please ensure that support for session cookies is enabled in your browser, then hit the back button to access the application.

The session cookies used by this application should not be confused with persistent cookies. Session cookies exist only temporarily in the memory of the web browser and are destroyed as soon as the web browser is closed. The applications running depend on this type of cookie to function properly.

The session cookies used on this site are not used to associate users of the IRS site with an actual person. If you have concerns about your privacy on the IRS web site, please view the IRS Privacy Policy.

How do I review my payment plan?

You can view details of your current payment plan (type of agreement, due dates, and amount you need to pay) by logging into the Online Payment Agreement tool.

What can I change with my payment plan online?

You can use the Online Payment Agreement tool to make the following changes:

• Change your monthly payment amount
• Change your monthly payment due date
• Convert an existing agreement to a Direct Debit agreement
• Change the bank routing and account number on a Direct Debit agreement
• Reinstate after default

How do I revise my payment plan online?

You can make any desired changes by first logging into the Online Payment Agreement tool. On the first page, you can revise your current plan type, payment date, and amount. Then submit your changes.

If your new monthly payment amount does not meet the requirements, you will be prompted to revise the payment amount. If you are unable to make the minimum required payment amount, you will receive directions for completing a Form 433-F, Collection Information Statement PDF or Form 433-B, Collection Information Statement for Businesses PDF and how to submit it.

To convert your current agreement to a Direct Debit agreement, or to make changes to the account associated with your existing Direct Debit agreement, enter your bank routing and account number.

If your plan has lapsed through default and is being reinstated, you may incur a reinstatement fee.

What if I am not eligible or unable to apply or revise a payment plan online?

If you are ineligible for a payment plan through the Online Payment Agreement tool, you may still be able to pay in installments.

• Individuals can complete Form 9465, Installment Agreement Request
  • If required in the instructions, please attach a completed  Form 433-F, Collection Information Statement PDF.
  • Mail your forms to us
• If you prefer to apply by phone, call 800-829-1040 (individual) or 800-829-4933 (business), or the phone number on your bill or notice

If you are unable to revise an existing installment agreement online, call us at 800-829-1040 (individual) or 800-829-4933 (business). If you have received a notice of default and cannot make changes online, or you received an urgent notice about a balance due, follow instructions listed on the letter and contact us right away.

How do I manage my plan to avoid default?

In order to avoid default of your payment plan, make sure you understand and manage your account.

• Pay at least your minimum monthly payment when it’s due.
• File all required tax returns on time and pay all taxes in-full and on time (contact the IRS to change your existing agreement if you cannot).
• Your future refunds will be applied to your tax debt until it is paid in full.
• Make all scheduled payments even if we apply your refund to your account balance.
• When paying by check, include your name, address, SSN, daytime phone number, tax year and return type on your payment.
• Contact us if you move or complete and mail Form 8822, Change of Address PDF.
• Confirm your payment information, date and amount by reviewing your recent statement or the confirmation letter you received. When you send payments by mail, send them to the address listed in your correspondence.

There may be a reinstatement fee if your plan goes into default. Penalties and interest continue to accrue until your balance is paid in full. If you received a notice of intent to terminate your installment agreement, contact us immediately. We will generally not take enforced collection actions:

• When a payment plan is being considered;
• While a plan is in effect;
• For 30 days after a request is rejected or terminated, or
• During the period the IRS evaluates an appeal of a rejected or terminated agreement.

• You didn’t previously have to file a return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty.
• You filed all currently required returns or filed an extension of time to file.
• You have paid, or arranged to pay, any tax due.

The failure-to-pay penalty will continue to accrue, until the tax is paid in full. It may be to your advantage to wait until you fully pay the tax due prior to requesting penalty relief under the Service’s first time penalty abatement policy.

Other administrative relief: If you received incorrect oral advice from the IRS, you may qualify for administrative relief.

Call the Toll-free Number on Your Notice

Is the information on your notice correct? If there is an issue you can resolve with your notice, a penalty might not be applicable. Call the toll-free number on your notice either to resolve the issue with your notice or to determine if you are eligible for First Time Penalty Abatement or other administrative waiver.

Is Interest Relief Available?

Interest charged on a penalty will be reduced or removed when that penalty is reduced or removed. If an unpaid balance remains on your account, interest will continue to accrue until the account is full paid. See our Interest on Underpayments and Overpayments page for additional interest information.

If the business is closed or files for bankruptcy protection, the IRS will look to the owner of the business for collection of the penalties, interest, taxes, and trust funds. In the case of a corporation or partnership, the IRS will look to the person responsible for paying the payroll taxes to collect the trust funds.

The employer that you worked for or are currently working for has been delinquent in paying its employment taxes to the IRS. To the extent that these taxes represent that portion withheld from the employees’ wages (i.e., trust fund taxes), the IRS can assess and seek collection from “responsible persons” in their individual capacity the amount of the unpaid trust fund taxes. Such liability is referred to by the IRS as Trust Fund Recovery Penalty (“TFRP”). The IRS can file a federal tax lien or take seizure actions in the form of a levy or seizure of personal assets. Clearly, TFRPs should be treated as serious IRS tax problems.

Under a TFRP, potential persons who can be held responsible for and required to settle back taxes can be officers, partners, corporate directors, shareholders, or employees of a business organization. If the IRS has classified you as a responsible person, you will be held jointly and severally liable for the outstanding trust fund taxes. The business does not have to stop operating in order for the liability to be assessed to you.

The TFRP may be assessed against any person who is responsible for collecting or paying withheld income and employment taxes and willfully fails to collect or pay them.

A responsible person is a person or group of people with the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes (employment taxes). This person may be:

• An officer;
• A member or employee of a partnership;
• A corporate director or shareholder;
• A member of a board of trustees of a nonprofit organization;
• Another person with authority and control over funds to direct their disbursement, or another corporation.

For willfulness to exist, the responsible person:

• Must have been, or should have been, aware of the outstanding taxes and either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required).
• The employment tax is an indication of willfulness.

Figuring the TFRP Amount

The amount of the penalty is equal to the unpaid balance of the trust fund tax. The penalty is computed based on:

• The unpaid income taxes withheld, plus
• The employee’s portion of the withheld FICA taxes.

Assessing the TFRP

If the IRS determines that you are a responsible person, the IRS will provide you a letter stating that it plans to assess the TFRP against you. You have 60 days after the date of the letter to get help paying IRS debt and appeal the determination. Your case would then be assigned to an Appeals Officer for review.

If you do nothing, the IRS will assess the penalty against you and send you a Notice and Demand for Payment. Thereafter, as previously noted, the IRS can take collection action against your personal assets, including filing a federal tax lien, enacting a tax levy, or taking seizure action.

By allowing us to analyze your situation and determine the best course of action, we should be able to formulate a strategy to settle this liability. For many taxpayers, this typically leads to an Offer in Compromise.