Finding out that you owe a massive amount of unpaid taxes could be a huge financial blow. You may worry about criminal charges and jail time or the risk of the federal government garnishing your paycheck. Especially if there were numerous years where you underpaid your taxes by accident, what you owe could far exceed your current ability to pay.
Being unable to pay a past-due tax balance in full only worsens the situation. Every day that goes by with a balance owed to the Internal Revenue Service (IRS) will mean more money in fees and interest. If you are not in a position to pay the full amount but could make a substantial lump-sum payment, then you might be in a position to suggest an offer in compromise to the IRS.
How an offer in compromise works
The IRS would rather receive a decent amount of what you owe now than to try to collect the full amount with limited success for years. Provided that you have filed all of your tax returns and are not involved in the bankruptcy filing at the moment, you could make an offer in compromise to settle your debt.
Both individuals and businesses can potentially qualify for an offer in compromise. You will have to propose a specific amount and then provide at least 20% of that amount as a down payment when submitting the offer. Calculating how much to offer and determining if you qualify can be a difficult process. You may need support figuring out which tax programs would best protect you given your current circumstances.
Learning more about how to make an offer in compromise could help you take control of your tax debt and move on with your life.