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Summary: You have two ways to pay back the IRS with $10k-$15k of tax debt; set up a payment plan or get your debt forgiven.  We’ll review your best tax relief options and odds of settling with the IRS below.

If you have $10,000 to $15,000 of IRS tax debt and aren’t sure where to turn, this article is for you.

Most tax debt articles won’t give you all your options.

(They just want to pitch a tax relief company!)

This is NOT one of those articles.

We’ll look at all your best tax relief options to pause IRS collection activities immediately including applying for debt forgiveness (Offer in Compromise), setting up a payment plan (Installment Plan), bankruptcy, and considerations for doing it yourself (DIY) or seeking help from a tax relief company.

Key sections:

You’re here because you already know that the IRS can garnish wages or file a tax lien on your property. You owe money to the IRS and it’s reached the point where you need to act.

You’re in the right place!

By the end of this article, you’ll be ready to make a decision about what tax relief option suits you best, and whether you should proceed on your own or choose to hire an expert to help.

The Big Problem Owing $10,000 to $15,000 (And 4 Solutions)

Here’s the brutal truth about having $10,000 to $15,000 of IRS tax debt.

Anyone who accumulates this amount of tax debt must have made some good money along the way. IRS logic says that clearly, you can afford to pay your debt.

But they have no idea what’s going on in your life that makes forking over, say, $13,000 close to impossible.

Fortunately, there are tax relief options to get the IRS off your back and end your tax problems.

  • Setting up an IRS payment plan
  • Settling your debt for less
  • Use a personal loan or retirement funds

Let’s take a closer look at some ways to pay back the IRS.

Setting Up an IRS Payment Plan

It’s true that you probably don’t have $11,000 or $12,000 laying around to pay back the IRS in a lump sum.

Give yourself a break.  8% of all U.S. taxpayers are delinquent.  You are not alone!

The good news is that the IRS allows you to set up a payment plan, known as an Installment Agreement. You can use IRS Form 9465 to apply for an installment agreement.

Installment plans let you pay over up to 72 months (6 years).

Installment Plan Sample Monthly Payments

Here are some sample monthly payments including the qualifications for each and the forms needed.  If you cannot afford these payments, you should skip to the next sections to see your other options.

Amount Owed

*Monthly Payment

Qualification/ Form(s) Needed

$10,000

$138.89

Streamlined/ Form 9465

$11,000

$152.78

Streamlined/ Form 9465

$12,000

$166.67

Streamlined/ Form 9465

$13,000

$180.56

Streamlined/ Form 9465

$14,000

$194.44

Streamlined/ Form 9465

$15,000

$208.33

Streamlined/ Form 9465

*Monthly payment is an estimate only and does not include an up-front application fee.  The IRS accepts a high percentage of installment plan requests, but acceptance is not guaranteed.  We highly recommend you speak to a tax expert from Optima Tax Relief prior to entering into an Installment agreement or if you cannot afford the monthly payments above.

Please note that interest and penalties can add up fast, pushing your balance into a higher category.  For this reason, we have also created a guide for you showing you how to get out of tax debt if you owe $16,000 to $25,000 to the IRS.

Benefits of Setting Up an Installment Agreement

There are several benefits to an installment agreement.

  • Manageable monthly payments.
  • Stress relief: the IRS won’t bother you as long as you make your payments.
  • Pauses IRS collection attempts.

Just be aware that if you enter into an installment agreement and then have difficulty paying them on time (if you default) the IRS is notorious for demanding the full balance you owe or filing tax liens and IRS levy actions. This may be one reason to try to offer them a lower amount than what you owe them.  (Offer in Compromise)

Quick Tip: Once you start an installment plan, you will have a harder time qualifying for a debt reduction request later.

IRS Payment Plan Qualification and Setup

Acceptance of your installment plan is not guaranteed.  You need to be up to date on all tax filings and other taxes owed, and you must not have already requested an installment agreement in the past 5 years.

If the IRS decides that you can pay your taxes in full, they will not approve the request.

You will use Form 9465 to apply.

Expect to pay between $31 to $225 in setup fees, depending on whether you set up a direct debit from your bank or pay by check, and whether or not you use their online application.

The absolute cheapest way to go is to use an online payment agreement (OPA) application at IRS.gov/OPA and set up a direct debit, which only costs a one-time $31 setup fee. Even this fee can be waived for lower-income applicants).

Who is a Good Candidate for an Installment Plan

If you sincerely cannot pay the full lump sum, you are a good candidate for an installment plan.

(There’s a difference between “cannot pay” and “don’t want to pay” )!

Whether your tax debt was incurred in the most recent tax year, or you owe years and years of back taxes, even if you’ve had your wages garnished or the IRS has a tax lien on your property, the installment plan could work for you.

Can You Do It Yourself?

Yes, you absolutely can…

But be very careful!

The IRS is quite picky about their forms being filled out perfectly.  Yes, you can do it on your own, but if you run into any questions along the way or want a second opinion, we recommend you contact our friends at Optima Tax Relief.  They’ve helped settle millions of dollars in tax debt.

Settling Your Debt for Less if You Owe the IRS $10k-$15k

The first thing most people who have over $10,000 in tax debt want to do is see if they can get the debt forgiven.

An offer in compromise is an offer to settle with the IRS for less than the amount you owe them.

This can work, but it’s far from a sure thing. The IRS accepts only about 40% of the applications it receives for Offers in Compromise.

The IRS will only accept an offer in compromise if they believe that you don’t have the capacity to pay the full amount and that trying to collect from you would be a waste of their time and resources.

This is not about negotiating. The IRS will review your income, assets, and expenses, and decide what they think you are able to pay.

Examples of success:

I browsed through dozens of testimonials from tax relief companies to find these.  Of course, there were dozens and dozens I found for a higher starting balance.  Here are a handful of cases I found for $10k to $15k owed.

Initial Amount Owed

Resulting Amount Owed

See Testimonial

Eric Owed $15,000

$3,500

YouTube Testimonial

Miguel Owed $11,000

$0

Community Tax Relief Site

David Owed $15,000

Less than $1,000

YouTube Testimonial

Gary Owed $13,000

$0

Community Tax Relief Site

Please be aware there’s no magic to these cases.  Just because you owe $13,000 like Gary, that doesn’t mean you’ll settle with the IRS for nothing. Each individual case is different.

But Will You Qualify?

The Offer in Compromise sounds like a dream come true.

The trick is qualifying. Beware!  It may not be easy.

For the 24,000 offers the IRS accepted in 2018, the IRS received 59,000 offers.  In other words, they accepted about 41% of the offers.

Absent special circumstances, the IRS will not accept an Offer in Compromise if they believe you can pay the debt in a lump sum or by payment plan.

In each case, they’ll consider your:

  • income
  • assets
  • debt
  • and more!

In order to qualify, you must offer the IRS an amount equal or greater to what the IRS calls “the reasonable collection potential.” (RCP)

That’s a complicated way of saying you need to offer them whatever they think they can squeeze out of you based on your assets such as your home, cars, investments, and savings, etc.

The good news?

If you’ve got few or no assets and/or very heavy debt, there’s a good chance your offer will be accepted.  

Making an Offer On Your Own VS. Hiring a Tax Relief Company

In order to apply, you must fill out IRS Forms 656, Offer in Compromise, and 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B if you own a business.

There’s also an application fee, which the IRS recently increased to $205 effective April 27, 2020.

You can file the forms on your own, but the forms are long and cumbersome and must be filled out perfectly.

Common Offer in Compromise Mistakes

Tax relief expert (and former IRS revenue officer) Jeffrey McNeal says when he processed offers, he saw tons of mistakes made on the forms, even when prepared by CPAs and enrolled agents!

The point is, you may need professional help.

Say, for instance, you owe the IRS $14,000 and submit an Offer in Compromise…  

Making sure all the math is right and all fields are filled out properly on Form 433 is just the starting point.  

Only 41% of submissions get approved, so it must be done perfectly to give you the best chances.  If it goes to appeal, you will not only need to fill out a form. McNeal states that just about the only ones to win their appeals were people who backed up their claims with:

  • The Internal Revenue Code (IRC)
  • The Internal Revenue Manual (IRM)
  • Existing case law

Ask yourself: Would you be qualified to reference the above in your appeal for tax relief?

The Internal Revenue Code is made up of over 9,000 sections, while the Internal Revenue Manual is made up of 39 parts (also massive), and we know there are tens of thousands of cases in case law.

Knowing what applies and what doesn’t to an Offer in Compromise would be nearly impossible for a non-professional.

Benefits to Hiring a Tax Relief Company

You might think the only benefit to using a tax relief company would be to help reduce a balance.  But after reading hundreds of reviews of tax relief companies, we’ve discovered that tax relief companies help Americans in a variety of ways:

  • provide guidance on audits
  • help set up payment agreements with the IRS
  • help get current on any unfilled tax returns 
  • some may be able to stop potential penalties such as wage garnishments

Most importantly, they pause the stress of dealing with the IRS. Typically any case submitted to the IRS takes months (or years) to review.  While waiting for their response, the IRS typically suspends any collection activities, and will often life wage garnishments, as is the case with an Offer in Compromise submission.

Alternative Ways to Pay the IRS

It might be cheaper for you to pay back the IRS using one of the following:

  • borrow from a retirement account (401k or IRA)
  • borrow from your home equity (such as a HELOC)
  • get a personal loan

Here are the rules for borrowing from your 401k, and you’d need to speak to a mortgage broker to find out about taking out equity if you own a home.

For personal loans, we recommend you visit Lending Tree. They could save you thousands in interest and fees, and help get you a low monthly payment to get the IRS off your back.

Conclusion: Choose Carefully!

You can deal with the IRS yourself. If your case is relatively simple, it might be the best move.

If you feel that the process is too complex or that you don’t have the knowledge you need, consider consulting a tax relief company.

Get Professional Help!

Compare multiple tax relief companies at one time, pick the best option, and get help managing your tax debt.

Best Tax Relief Companies