Can’t Pay Your Tax Bill? IRS Options That May Help

Discovering that you owe money to the IRS can be overwhelming—especially when paying the balance in full isn’t financially realistic. The good news is that the IRS offers multiple programs designed to help taxpayers manage or reduce their tax debt. Both individuals and businesses may qualify, depending on their circumstances. Below is an overview of the most common relief options.

Short-term payment arrangement

Taxpayers with a total balance of less than $100,000, including penalties and interest, may qualify for a short-term payment arrangement. This option allows up to 180 days to pay the balance in full.

Although this provides temporary relief, interest and penalties generally continue to accrue until the debt is paid. Setup fees may apply. Requests are typically made using IRS Form 9465.

Long-term installment agreement

If your tax debt is under $50,000, you may be eligible for a long-term installment agreement that spreads payments over as many as 72 months.

This option makes monthly payments more manageable, but interest and penalties will continue to accumulate, and setup fees may apply. Form 9465 is also used to request this arrangement.

Innocent spouse relief

When a tax liability results from a spouse’s incorrect reporting or fraudulent activity, innocent spouse relief may be available.

This relief applies only to tax issues tied to your spouse’s income and requires proof that you did not know—and had no reason to know—about the error or wrongdoing. Applications are submitted using Form 8857.

Partial payment installment agreement (PPIA)

A partial payment installment agreement allows taxpayers to make affordable monthly payments even if those payments won’t fully satisfy the debt before the IRS’s 10-year collection period expires.

This option is often used by taxpayers who cannot pay the full balance but do not qualify for an offer in compromise. To apply, you’ll need Form 9465, Form 433, and supporting financial documentation.

Offer in compromise (OIC)

An offer in compromise allows eligible taxpayers to settle their tax debt for less than the full amount owed. The IRS evaluates factors such as income, expenses, asset equity, and overall ability to pay.

To be considered, you must be current on all required tax filings, not involved in an active bankruptcy, and meet specific compliance requirements if you operate a business. Approval rates are relatively low—generally around 30–40%—and accepted offers vary widely by case.

An OIC application typically includes:

• Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses

• Form 656 to calculate the offer amount

• Extensive financial documentation

• A $205 non-refundable application fee (with limited exceptions)

• An initial, non-refundable payment toward the proposed settlement

Payment options include a lump-sum offer or periodic payments over time. While the IRS often pauses active collection during review, existing tax liens may remain until all terms are satisfied.

If the IRS does not issue a decision within two years (excluding appeal periods), the offer is automatically accepted. Denied offers may be appealed within 30 days using Form 13711, with appeals often taking several months.

Expiration of tax debt after the collection period

In most cases, the IRS has 10 years from the assessment date to collect a tax debt. If the balance is not collected within that window, it may be discharged. However, this outcome is uncommon, and many actions—such as filing certain relief requests—can pause or extend the collection period.

Get guidance before deciding

IRS relief programs can be complex, and the wrong choice may cost you time and money. Working with a qualified tax professional can help you evaluate your options, ensure compliance, and choose the strategy that best fits your financial situation.