IRS offers a variety of payment plans, such as installment agreements and partial pay installment agreements. Unfortunately, penalties and interest continue to be charged on your outstanding balance as you pay the debt off. The complexity of the process to establish a payment plan depends on the size of your outstanding taxes, length of you need to pay, and your current financial capabilities.
In most cases, the IRS wants the payment plan to pay off the tax debt before the 10 year time limit for collection expires. Other times, they may work with you to partially pay the tax debt and let what balance is remaining after 10 years simply expire.
In most payment plans, the IRS generally wants a you to provide a financial statement in the form of a 433A. This is to be used to calculate what you can pay as well as to identify what other assets you have that they can levy if necessary.
Be very clear...completing a 433A or similar form is a complex process and involves a significant amount of negotiation with the Revenue Officer. If you complete it incorrectly or don't present your case properly, the Revenue Officer may demand that you to sell your house, take funds out of retirement accounts, or other extreme efforts to pay the tax bill.
It is very important to get an enrolled agent involved in preparing and presenting a payment plan to the IRS!
