A Guide to the Most Common Tax Resolutions

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Did you know that you can expect your tax return to be processed in about two weeks after you submit your return?

Sometimes you can incur delay waiting for your taxes to be finalized, which can snowball into other self-inflicted taxation issues. We can help you avoid these problems.

It can be hard to stay on top of all the IRS regulations each year. Luckily, we’re here to help. In this guide, we will explain the most common tax resolutions that are available to taxpayers.

Installment Agreements

An installment agreement is a Tax Resolution commonly used when the taxpayer owes the IRS a large amount of money. It’s a type of payment plan where the taxpayer pays the total back to the IRS over several months or years. It can be a great way to resolve your IRS debt if you can’t pay the total in full.

In some cases, the taxpayer can request an extended payment plan that can stretch out payments even further. Applying for an installment agreement used to require a time-consuming process with paperwork. Yet, the IRS has since adopted an online application system, allowing taxpayers to apply right from their mobile devices.

The IRS generally approves installment agreements, so you can make your payment plan official easily.

Offer in Compromise

It is a tax resolution that allows you to settle your tax debt for less than the full amount owed. This is a common resolution for taxpayers who are experiencing financial hardship to pay their taxes in full.

Once the offer in compromise is submitted, you will need to prove to the IRS that you are unable to pay your taxes in full. Settling for less than the full amount owed is in the best interest of both you and the IRS.

Currently Not Collectible

This status signifies that the taxpayer’s financial situation does not allow the IRS to collect payment. The IRS understands the struggles taxpayers might face in their efforts to remedy their unpaid tax problems. When a taxpayer is designated as “Currently Not Collectible”, the IRS will not require any payments from them.

Furthermore, the IRS halts collection efforts will be imposed. As a taxpayer with unpaid taxes, you can file for “Currently Not Collectible” status by submitting an IRS Form 433-A. This form provides the IRS with detailed financial information to qualify for the resolution.

Additionally, it’s important to remember that a taxpayer must file all necessary tax returns to be eligible for the resolution. Ultimately, “Currently Not Collectible” is a significant tax resolution to know and understand. If you qualify for CNC, the IRS will temporarily stop all collection activities, and you will not be required to make any payments until your financial situation improves.

Penalty Abatement

Penalty abatement is a tax resolution that allows you to have your penalties waived or reduced. This is a common resolution for taxpayers who are unable to pay their taxes in full and are facing substantial penalties.

To qualify for penalty abatement, you will need to demonstrate to the IRS that you had a reasonable cause for not paying your taxes on time, such as a natural disaster or a medical emergency.

Lien Relief

A federal tax lien is placed on a taxpayer’s assets when they owe back taxes to the IRS. This lien encumbers the taxpayer’s assets so they cannot be sold or refinanced until the debt is paid.

A lien relief resolution would involve enrolling the taxpayer into one of the IRS resolution programs, such as an Offer in Compromise, having the IRS move the lien to another asset, or reaching an agreement to reduce or eliminate the lien.

This resolution would enable the taxpayer to free up their assets and regain control over their finances. It’s important to keep in mind that the terms of the lien relief resolution must be agreed upon between the taxpayer and the IRS, and should be tailored to fit the taxpayer’s unique circumstances.

Innocent Spouse Relief

It is a tax resolution that allows you to be relieved of any tax liability that resulted from a spouse or ex-spouse’s erroneous or fraudulent tax return. This is a common resolution for taxpayers who were not aware of their spouse’s fraudulent tax activities.

To qualify for Innocent Spouse Relief, you will need to demonstrate to the IRS that you had no knowledge or reason to know of the erroneous or fraudulent items on the tax return and that it would be unfair to hold you responsible for the tax debt.

Partial Payment Installment Agreement

A Partial Payment Installment Agreement (PPIA) is a tax resolution that allows you to pay off your tax debt in installments, but for less than the full amount owed. This is a common resolution for taxpayers who are unable to pay their taxes in full and do not qualify for an OIC.

With a PPIA, you will agree to make monthly payments to the IRS until your tax debt is paid off.
However, the total amount you pay will be less than the full amount owed.


Tax solutions for bankruptcy can vary depending on the case. Filing for bankruptcy provides an opportunity for relief from tax debt and can provide debtors with a fresh financial start.

File for Chapter 7 bankruptcy if you want to discharge your tax debt completely; you can do this after the three-year window from the original filing date of the return, or 240 days after the IRS assessed the debt.

With Chapter 13 reorganization bankruptcy, the debtor must pay some of the debt over the next three to five years and have the remainder discharged at the end of the plan. Before filing taxes for bankruptcy, you should speak to a tax specialist to understand the various tax consequences of bankruptcy and how this affects both present and future taxes.

Guide to the Most Common Tax Resolutions

Taxes don’t have to cause headaches and confusion anymore. A Guide to the Most Common Tax Resolutions can help clear the air, understand the process, and help you find the best resolution for your particular situation. Make sure to browse through and leverage the various tips and tools found in this guide.

Get ahead of the game with tax resolutions now!

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