Whenever a taxpayer has a back tax problem, they must make sure that they deal with it right away. The first IRS program that many people go to is the Offer in Compromise program. But considering that approximately 85% of taxpayers with back tax issues do not qualify for an offer in compromise, negotiating an installment agreement may be the next best thing.

The installment agreement process is much easier to complete than an offer in compromise. The installment agreement allows the IRS to set a monthly payment plan with the taxpayer that is determined by examining the taxpayer?s liability and comparing that to how much they can afford to pay on a monthly basis.

One of the most popular programs is the IRS Installment Agreement. This program allows the IRS to establish a monthly payment plan with the taxpayer that is based on the taxpayer?s tax liability and how much they can afford to pay in monthly installments.

When establishing an IRS installment agreement, the IRS may require disclosure of the taxpayer?s financial position. There are also other conditions that must be kept once the IRS installment agreement is established such as being compliant with future income tax filings and making timely tax payments.

If the taxpayer cannot pay his or her entire tax liability and does not qualify for an offer in compromise or a currently not collectible status, an installment agreement may be the next best choice. If the balance that is owed is less than $25,000 the process becomes a lot easier and the IRS generally has a great willingness to get it completed.

The agency will only enter into an IRS installment agreement once the taxpayer has filed all of his or her necessary federal income tax returns. Depending on the situation, the IRS may file a Notice of Federal Tax Lien to protect the interest until the tax liability is paid in full.

By aggressively negotiating with the IRS and working diligently, most taxpayers with back tax issues can reach an installment agreement. They may need the assistance of a tax attorney or a CPA to get it done, but the goal is to get an installment agreement that works within your financial budget.

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