Federal law overview
The IRS offers formal resolution programs for tax debt: Offer in Compromise (OIC) under IRC § 7122, installment agreements under IRC § 6159, Currently Not Collectible (CNC) status under IRC § 6343, and penalty abatement under IRC § 6651 and § 6656. Each has eligibility criteria and required forms.
Generic AI prompt template
I owe the IRS $[AMOUNT] for tax year(s) [YEARS]. I am requesting [an Offer in Compromise / an installment agreement / penalty abatement]. My financial situation: [BRIEF DESCRIPTION — income, assets, expenses, reason for inability to pay]. Draft a formal letter / narrative to accompany IRS Form [433-A OIC / 9465 / 843] that: (1) identifies me by name [NAME] and SSN last four [XXXX], (2) explains my financial hardship, (3) describes any special circumstances (job loss, medical emergency, natural disaster), (4) states the resolution I am seeking and the amount I can realistically pay, and (5) requests that the IRS consider my application under the relevant IRC section.
State-specific guides — Tax Resolution Paperwork
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Frequently asked questions
What is an Offer in Compromise? +
An OIC is an agreement with the IRS to settle your tax debt for less than the full amount owed. The IRS evaluates your 'reasonable collection potential' — assets plus future income. If you can pay your full tax debt, the IRS will not accept an OIC. See irs.gov/payments/offer-in-compromise.
What is the difference between a payment plan and an installment agreement? +
Installment agreements (IRS Form 9465) let you pay your tax debt in monthly installments over time. Interest and penalties continue to accrue, but the IRS agrees not to levy your wages or accounts while the agreement is in effect.
What is Currently Not Collectible status? +
If you cannot pay basic living expenses and also make tax payments, you may qualify for CNC status. The IRS suspends collection activity but still assesses interest and penalties. CNC is a temporary status — the IRS reviews it periodically.
Should I use a tax resolution company? +
Be cautious. The IRS warns consumers about companies charging large upfront fees to 'settle for pennies on the dollar.' A CPA, enrolled agent, or tax attorney can represent you before the IRS for similar or lower fees and with professional accountability.