When it comes to tax debt, the IRS is often willing to negotiate a settlement. The most common settlement is an Offer in Compromise (OIC), which allows taxpayers to settle their tax debt for less than the full amount owed. But what percentage does the IRS usually settle for?
The answer to this question depends on the individual taxpayer’s financial situation and the amount of tax debt owed. Generally speaking, the IRS will accept an OIC if the taxpayer can demonstrate that they cannot pay the full amount of their tax debt. In such cases, the IRS will usually accept a settlement of less than the full amount owed.
The amount of the settlement will depend on the taxpayer’s ability to pay. If the taxpayer has enough money to pay the full amount of their tax debt, the IRS will usually accept a settlement of 20 percent or less. This is known as the 20 percent payment. The 20 percent payment is generally nonrefundable, meaning it won’t be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance. Instead, the 20 percent payment will be applied to the taxpayer’s tax liability.
If the taxpayer does not have enough money to pay the full amount of their tax debt, the IRS may accept a settlement of less than 20 percent. This is known as a partial payment installment agreement (PPIA). Under a PPIA, the taxpayer agrees to pay a portion of their tax debt in installments over a period of time. The amount of the settlement will depend on the taxpayer’s ability to pay.
In some cases, the IRS may accept a settlement of less than the full amount owed even if the taxpayer has enough money to pay the full amount. This is known as a “hardship” settlement. To qualify for a hardship settlement, the taxpayer must demonstrate that they are unable to pay the full amount of their tax debt due to financial hardship.
In conclusion, the percentage the IRS will settle for depends on the individual taxpayer’s financial situation and the amount of tax debt owed. Generally speaking, the IRS will accept an OIC if the taxpayer can demonstrate that they cannot pay the full amount of their tax debt. In such cases, the IRS will usually accept a settlement of less than the full amount owed. The amount of the settlement will depend on the taxpayer’s ability to pay. The 20 percent payment is generally nonrefundable, meaning it won’t be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance. Instead, the 20 percent payment will be applied to the taxpayer’s tax liability. In some cases, the IRS may accept a settlement of less than the full amount owed even if the taxpayer has enough money to pay the full amount. This is known as a “hardship” settlement.
