Tax Management and Options for Financial Hardship

For managing an IRS installment plan, critical strategies include making every payment on time to avoid default. It's also essential to file all future tax returns on schedule and pay any new tax liabilities in full by the due date, whether through withholding or estimated payments. Falling behind on current taxes can cause your installment plan to default. Keep meticulous records of all payments made. If you face financial hardship regarding your tax obligations, several options exist. An **Offer in Compromise (OIC)** allows certain taxpayers to resolve their tax liability with the IRS for a lower amount than they originally owed, provided they meet specific criteria demonstrating an inability to pay the full amount. Alternatively, you could request that your account be placed in **Currently Not Collectible (CNC)** status. This means the IRS temporarily suspends collection efforts if you can prove you cannot afford to pay your taxes and meet basic living expenses. Interest and penalties continue to accrue, and the IRS may review your financial situation periodically. You might also explore adjusting the terms of your existing installment agreement if your financial situation has worsened, or investigate **penalty abatement** if your hardship contributed to the penalties.