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At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based strict editorial integrity. Our company gets compensated by partners who appear on our website. Here is how we get compensated.
At Solvable, we care about your financial well-being and are here to help. Our research, articles and ratings, and assessments are based strict editorial integrity. Our company gets compensated by partners who appear on our website. Here is
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What is the IRS Partial Payment Program and How It Reduces Back Taxes
The IRS offers back tax reduction plans that help taxpayers and businesses get a reduction in back taxes. Many people erroneously believe that back taxes reduction plans are open for all. The truth is that IRS back tax reduction plans are only for those who cannot afford to pay their full tax debt. If you are experiencing financial hardship, you can consider applying for IRS back taxes reduction programs such as the IRS Partial Payment Installment Agreement (PPIA) or Offer in Compromise (OIC). These plans allow you to pay less than what you owe in back taxes.
The IRS has many programs for resolution of back taxes. Installment Agreements are one of the most popular because most taxpayers can qualify for them. Partial Payment Installment Agreement is an Installment Agreement plan that allows back taxes reduction. Using this plan, taxpayers who are in financial difficulty and cannot pay their entire back taxes can pay less and permanently resolve their back taxes. Under the Partial Payment Installment Agreement, you can pay the reduced amount in installments.
How to Qualify for the Partial Payment Installment Agreement Plan?
After you apply for the Partial Payment Installment Agreement, the IRS analyzes your ability to pay to determine how much of your back taxes you can pay. When conducting the financial analysis, they look at your income, property, and assets to judge your paying capacity. Depending upon that, they reduce the back taxes amount to what you can afford.
Along with this major criteria, you also need to file all your past tax returns before you apply for the Partial Payment Installment Agreement program. The IRS rejects applications for PPIA if they find that there are unfiled tax returns.
IRS Partial Payment Plan: Offer in Compromise
An Offer in Compromise is another IRS back taxes reduction plan that allows you to pay less than what you owe in back taxes. Depending upon your financial condition, the IRS reduces your back taxes to what you can afford to pay.
An Offer in Compromise is only for those who are financially strained and cannot pay their full back taxes. Unscrupulous tax services promise back taxes reduction to anybody who would hire their services. Beware of such services when you are looking to hire help for back taxes reduction.
How to Qualify for An Offer in Compromise?
After an Offer in Compromise application reaches the IRS, they conduct a financial analysis of the applicant to determine his/her ability to pay. Just like in Partial Payment Installment Agreement, an Offer In Compromise too, the IRS looks at your income, equity in assets, and expenses to determine your ability to pay. If they find that you cannot pay your back taxes using your income or equity in assets, then they reduce the amount to what you can pay.
If you cannot pay any amount in back taxes, the IRS is likely to put you under the Currently Not Collectible status. In this case, the agency places collection actions on hold and waits for your financial condition to improve so that they can collect the back taxes.
What is a Statute of Limitations?
The IRS can only collect back taxes 10 years from the date of non-payment. This 10-year collection period is called the Statute of Limitations. Usually, if they cannot collect back taxes until the expiry of the Statute of Limitations, they stop the collection and close the case. Therefore, in back taxes collection, the IRS looks at the Statute of Limitations to see if they can hope to collect back taxes before the expiration of the Statute of Limitations. In rare cases, the IRS extends the statutory period for the collection.
Installment Agreements
Taxpayers that cannot qualify for IRS partial payment plans can use an Installment Agreement to resolve their back taxes. The IRS offers a variety of Installment Agreements, namely:
Guaranteed Installment Agreement
Streamlined Installment Agreement
Non-Streamlined Installment Agreement
Partial Payment Installment Agreement
In all these plans, you pay your back taxes amount in installments. The amount to pay in each installment depends upon your paying capacity as ascertained by the IRS. Among the different Installment Agreements, only the Partial Payment Installment Agreement allows back taxes reduction.
If you find that you cannot qualify for the Partial Payment Installment Agreement, you can explore the other Installment Agreements and resolve your back taxes by paying your full back taxes in installments. Again, the amount you pay in installments depends upon your paying capacity.
Penalties and Interest on Back Taxes
Before applying for any IRS back taxes resolution plan, it is important to know about the penalties and interest the IRS charges on back taxes.
From the day of non-payment of taxes owed, the IRS begins to charge penalties. For non-filing of a tax return, the penalty charged is 5%. For non-payment of the taxes owed, the penalty charged is 0.5%. Along with penalties, the IRS charges interest on back taxes as well.
The penalty is charged each month, and interest is compounded daily. Every month that the back taxes remains unpaid, the total amount owed keeps growing. If left unpaid for months or years, the amount grows substantially, making it even more difficult for the taxpayer to pay it.
How Hired Help Can Achieve Back Taxes Reduction for You
Hiring a tax attorney or a back taxes resolution company can help immensely in getting the most beneficial resolution. A professional looks at many ways to save you from paying more to the IRS, such as penalty abatement, where the IRS reduces or waives the penalty charged on back taxes.
A tax attorney can negotiate the terms and conditions of the agreement to make it more favorable for you. Especially in back taxes reduction cases, it is best to hire a qualified and honest tax attorney or a back taxes resolution service that can get you the most back taxes reduction while taking care of IRS notices and collection actions. It will make your journey to resolution smoother and get you the most benefits possible.
Solvable is a for-profit company that helps customers resolve their tax problems, but a free service for consumers. Partners cannot pay us to guarantee favorable editorial reviews or ratings. We do not publish favorable (or unfavorable) editorial reviews or assessments at the direction of an advertiser or partner. We always work to put consumers first and do our best to provide value in meaningful ways, but our reviews are subjective.
How We Make Money
Solvable is compensated by some of the companies seen on our website. Most often, Solvable receives fees when one of our readers clicks, fills out a form, applies for, or receives a financial product from one of our partners. We also earn fees for capturing consumer stories and writing about them, displaying advertising, having our partners sponsor certain parts of the site, and writing content that may be relevant to our partner and their audience. This compensation may impact where products appear on this site, including article pages, comparison listings, the order in which they appear or if they will even appear on a given page, and our matching recommendations. Solvable has not written about, reviewed, or rated all financial products available to consumers.
In addition, we may be compensated in the following ways:
Referrals to consumers who use the online form or locator line that may provide expert answers to questions;
Marketing tax resolution, tax preparation, tax audit help and general tax assistance.
Referrals to services that help consumers with tax resolution, tax preparation, tax audit help and other tax issues.
We do recommend that you shop around and compare services and costs with other companies while performing your own due diligence, especially since people’s experiences with companies can change over time.
Free Solvable Services
The offers that you are matched up with are from companies or attorneys/law firms that we may receive compensation from. Based on our initial review of such companies or individuals, we feel comfortable introducing them to our readers. We won’t recommend something just because we’re offered payment to endorse or promote it. However, we do recommend that you shop around and compare services and costs with other companies while performing you own due diligence, especially since people’s experiences with companies can change over time.
We are not attorneys and we don’t provide legal advice. As always, we encourage you to do your homework and check out individuals and companies before you hire them. If you are already working with an attorney, we urge you to ask them your questions. After all, they will be familiar with your situation and the laws in your state.
We hope that you find Solvable helpful in your efforts to get a fresh start.
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Personal Loan Providers determine the underwriting criteria necessary for approval. You should review each Provider’s terms and conditions to determine which loan works best for you and your own personal financial situation. All reasonable efforts are made to provide and maintain accurate information. All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each Provider’s or affiliates discretion. There is never a guarantee you will be approved for credit or that upon approval you will qualify for the advertised rates, fees, or terms that were shown.
Be sure to speak with your representative about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask up front about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $35,000 may be available through participating lenders or affiliates; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. In some cases, lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Ask your representative for details.
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Business Loans Advertiser Disclosure
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Business Loans are those loans that are for commercial use and any property and/or proceeds from the proposed request will be used by the requestor for commercial purpose only and not for any personal, family or household purposes.
Most of our Business Funding Partners or affiliates, do not require collateral for business loans; however, please note that it is possible to be offered another product by the lender depending on your needs and if the underwriting requirements dictate the same. Traditional bank and SBA loans generally are known for collateral requirements.
There is no one-size fits all business loan. Rather there are several types that will likely be offered and or discussed with you upon completing your request. Business Funding Partners determine the underwriting criteria necessary for approval, you should review each Partner’s terms and conditions to determine which business funding option works for your business’s financial situation. All reasonable efforts are made to provide and maintain accurate information. All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each Partner’s discretion. There is never a guarantee your business will be approved for credit or that upon approval your business will qualify for the advertised rates, fees, or terms shown. Lender terms and conditions will apply and all products may not be available in all states. Ask your loan representative for details.
Student Loan Refinancing Advertiser Disclosure
Student loan offers that appear on this site are from companies or affiliates from which solvable may receive compensation. This compensation may impact how and where products appear on this site (including for example, the order in which they appear or whether a lender is “featured” on the site). solvable does not include all student loan companies or all types of offers available in the marketplace.
Pursuant to the contracts between solvable and the Partners or affiliates on its Network, solvable may also receive information from the Partner or affiliate regarding the status of your application including, but not limited to, the amount or disposition of your loan. Information specific to the Partner/affiliate’s use of your information will be found in their specific Privacy Policy.
Potential savings may vary based on the interest rates, balances and remaining repayment term of the loans you are seeking to refinance. Your overall repayment amount may be higher than the loans you are refinancing even if your monthly payments are lower. Variable rate options will fluctuate over the term of your loan with changes in the LIBOR (or other index utilized by the lender) rate, and will vary based on applicable terms and presence of a cosigner. Fixed interest rates may be based on applicable terms and presence of a co-signer. Additional terms and conditions, and rates are subject to change at any time without notice and may not be available in all states or for all types of current student loans. Such changes should only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Lenders are required to provide every potential borrower with disclosure information before they apply for a private student loan. The Lender you select is required to provide you with an Application Disclosure and an Approval Disclosure within the application process before you accept the terms and conditions of your loan. solvable is not a lender or creditor, it does not offer, extend or alter credit terms. Only participating lenders can perform the full application and deliver the required disclosures, please ask your lender about rates, terms, fees, and potential discounts that may be available for each product.
Please Note:
Certain federal and private student loans may not be eligible for consolidation/refinance.
Certain consolidation/refinance plans may result in higher monthly payments or negative consequences (i.e. prepayment penalties).
Consolidation/refinance may lead to other negative results, such as loss of grace periods.
Loans in default generally cannot be consolidated until completion of a repayment trial plan so tell your lender if you are in default and determine relevant options (be wary of those asking for upfront fees as well)
Other options or programs may fit your needs (i.e. personal loan, debt consolidation and/or debt relief). Consult your financial and/or tax advisor prior to making any decisions.
Solvable is not a creditor as it does not offer, extend or alter credit; rather it is an online market lead generator that allows consumers to shop and compare rates, terms and costs associated with financial products such as mortgages, auto loans, personal loans, student loans, etc. solvable does not originate or fund any product it markets; rather it has a network of lenders or Partners/affiliates. You may choose to speak with one or more of these lenders or Partners/affiliates to determine what your actual terms and savings may be. Only a lender can provide you with a formal application for credit, your inquiry form here is merely an expression of interest and/or intent to obtain credit or assistance. You must discuss your actual credit situation and fill out the lender’s required documents prior to obtaining an extension of credit. Network lenders may not have the best or the lowest rates so you are encouraged to continue to shop and compare additional lenders, credit unions, local financial institutions, etc. to ensure you are truly getting your best deal for your situation.
You should contact your tax professional or other financial advisor to determine if you can actually realize savings by refinancing when it can extend the life of your current loan. You should ask the lender about all terms, rates, fees and costs associated with each product and if you will realize a net tangible benefit from the same. All initial estimated savings is done by trying to calculate what your rate may be; however, solvable does not have that information and cannot guarantee potential savings or that lenders will approve you for such product that would warrant those savings. Rates are not guaranteed and change daily. Lenders/Brokers/Dealers/Partners that perform the actual underwriting will have to determine if you meet their underwriting criteria which is unknown to solvable at the time of matching/offer/quote delivery. All amounts are estimates and examples only and do not represent an actual offer.
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