If you’re receiving IRS letters, notices, or wage-garnishment threats, you’re probably wondering: Can I make a deal with the IRS?
The answer is yes—in many cases you can. The IRS prefers to work with taxpayers who show good-faith intent rather than chase uncollectible debt.
Here are the main ways to reach a fair deal.
Option 1: Installment Agreements
An Installment Agreement lets you pay your balance over time.
Interest and some penalties continue, but it stops most collection actions.
It works best if you have steady income and can make monthly payments.
Option 2: Offer in Compromise
If paying in full would cause financial hardship, you may qualify for an Offer in Compromise (OIC)—a legal settlement that allows you to pay less than you owe.
The IRS calculates your Reasonable Collection Potential (income, expenses, and assets). If your ability to pay is lower than your total debt, they may accept a reduced amount.
Option 3: Currently Not Collectible Status
If you can’t afford any payment at all, the IRS can mark your account Currently Not Collectible (CNC).
This pauses active collection until your finances improve. The debt remains, but you gain breathing room and protection from new levies.
Option 4: Penalty Relief and Partial Plans
Even without an OIC, you can often remove or reduce penalties through First-Time Abatement or Reasonable-Cause requests.
A Partial Payment Installment Agreement lets you pay less each month based on what you can afford.
Why Work With a Tax Relief Professional
The IRS process is mathematical and procedural—not emotional.
A professional will:
- Evaluate your household budget using IRS standards
- Identify programs you truly qualify for
- Handle paperwork and negotiations correctly the first time
Which Deal Fits Your Situation?
- You can pay within 180 days: a short-term payment plan.
- You owe $50,000 or less and can pay over about six years: a streamlined installment agreement.
- You cannot pay the full balance before the collection period ends: a partial payment agreement or an Offer in Compromise.
- You cannot cover basic living expenses: Currently Not Collectible status.
- Your penalties came from a good-faith mistake or circumstances outside your control: penalty abatement.
What the IRS Will Ask For
For anything beyond a simple payment plan, the IRS wants a full picture of your finances, usually on Form 433-F or Form 433-A: income, monthly expenses, bank balances, retirement accounts, vehicles and real estate. It then compares your expenses to its Collection Financial Standards, which set allowances for food, housing, transportation and health care based on where you live and the size of your household.
Expenses above those allowances are often not counted, which is why the IRS may say you can afford more than you think. Preparing the financial statement carefully is where most of the negotiation happens.
Getting Penalties Removed
First-Time Abatement can remove failure-to-file and failure-to-pay penalties if you had no penalties in the prior three years, have filed all required returns, and have paid or arranged to pay the tax. Reasonable cause relief covers situations such as serious illness, a death in the family or a natural disaster. Interest tied to a removed penalty is removed too.
Deals That Do Not Exist
There is no program that erases IRS debt simply because the amount is large, and “Fresh Start” is not a separate application. It is the name for the IRS payment plan, lien and offer rules described above (see what the IRS Fresh Start Program really is). Be cautious with any company that promises a specific settlement before reviewing your finances. Our guide on choosing a legitimate tax relief company lists the warning signs.
Frequently Asked Questions
Will the IRS negotiate with me directly?
Yes. You can call the IRS or use its online tools yourself. Many taxpayers choose a representative such as an enrolled agent or CPA, who can speak with the IRS on their behalf after you sign Form 2848.
Does making a deal stop IRS collection?
In most cases, yes. The IRS generally stops levies while an installment agreement or Offer in Compromise request is pending and while an agreement is in effect.
Can I make a deal if I have not filed all my returns?
Usually not. The IRS requires all required returns to be filed before it approves a payment plan, an offer or hardship status, so missing returns are filed first.
Get Help From Tax Relief Systems
Need help making a deal with the IRS?
Contact Tax Relief Systems LLC for a free, confidential case review.
Talk to Tax Relief Systems LLC for a free consultation at (877) 807-3133 or info@taxreliefsystemsllc.com
Article written by Richard Lococo.