Once IRS collections division is handling your case, there are basically these 3 options for you.
1. Installment agreement that is basically a repayment plan within six years maximum.
2. Offer in compromise that is basically a settlement of all your tax liability for less than the full amount.
3. Currently not collectible status that suspends collections activities against you, but the interest keeps accruing. This is a better fit for those who are usually in their retirement age or those who have some serious factors (e.g. disability) that prevents them from ever improving their financial circumstances.
You can find more information about these options at
http://www.irs.gov/pub/irs-pdf/p4418.pdf [Currently not collectible information]
Although you can submit the request for any of these options yourself, a tax controversy attorney who regularly deals with these request would provide the best chances for you to obtain approval.
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With you balance below $50,000 you should be accepted into the Fresh Start Program. The criteria to qualify for streamlined installment agreements with a balance due of $25,001 to $50,000 are:
The debt must be full paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
You must be compliant with all filing and payment requirements.
Individuals who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.).
Businesses are limited to defunct sole proprietors who owe any type of tax (Form 940, 941, 943, etc.).
You must enroll in a Direct Debit Installment Agreement.
A limited amount of financial information may be required during the application process.
I do not provide legal advice to non-clients.
You don't say what type if tax debt it is. It may also make sense to speak with a bankruptcy attorney. Some taxes can be discharged in bankruptcy. It can also sometimes make sense to use a chapte 13 filing to repay those taxes that cannot be discharged but grainy the benefit of a discharg for some tax and possibly the penalties as well.
The Fresh Start Program does exist, as one of the colleagues have explained to you, and based on the information you provided, you do qualify. The installment agreement can be set up over the phone, where you will be asked some questions about your current financial situation. But you will not have to fax any paperwork to the IRS. If your proposed payment amount is accepted, the process requires a final manager's approval. In other words, your case will go to a manager, and once approved, you will receive a letter with further instructions. If you call the IRS 1-800 number and the person on the other end of the phone has not heard of this Fresh Start Program, hang up and call the same number again; hopefully, the next employee you get will be able to help you. (I usually write down the name and employee ID number of each IRS employee with whom I speak.)
My response to any question on this site is not, nor is it intended to be, legal advice, and it does not establish attorney-client relationship. I invite you to contact me and welcome your calls and emails. However, contacting me does not create an attorney-client relationship. Please do not send any confidential information to me until such time as an attorney-client relationship has been established.