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Do you have to pay the full amount of taxes that you owe?

On Behalf of | Jun 3, 2022 | Tax Law

If you find out that you’re behind on taxes, you may be unable to come up with a way to pay. You’re not doing this maliciously. There was no intent to commit fraud or to get out of paying your taxes. You just honestly cannot pay the back taxes that are due.

Is it possible to pay less than you owe? Or are you simply going to be dealing with this tax debt forever?

Using an offer in compromise

There is one way that you can pay less than you owe, and it’s through an offer in compromise. Essentially, if the IRS decides that it’s a hardship for you to pay the full amount, they may accept a smaller offer. They will then waive whatever remains.

They consider numerous different factors when determining whether or not to approve your request for an offer in compromise. But one of the biggest things that the IRS is looking for is simply how much they can expect to get from you in a reasonable time. If they believe that the offer in compromise is close to that amount, they will often take it simply to be done with the case sooner.

For instance, maybe you owe $100,000 and you can only pay $40,000 right now. Your business has taken a turn for the worse and it’s unlikely that you’ll ever be able to pay the other $60,000. The IRS would rather have something than nothing, so they may accept an offer in compromise.

Please note that these numbers are just an example and that every case is unique. Take the time to find out what legal options you may have.