How to Choose the Right Program
Selecting the right IRS tax relief program depends on your specific financial situation. Follow this decision framework to understand your best option.
The IRS Decision Framework
The IRS evaluates your case using a priority system. Understanding this framework helps you know which program to pursue.
IRS Priority Order
- Full Payment: Can you pay in full right now? If yes, this resolves everything immediately.
- Currently Not Collectible (CNC): If paying anything causes hardship, CNC pauses collection.
- Offer in Compromise (OIC): If you can't pay the full amount even over time, settle for less.
- Installment Agreement (IA): If you can afford monthly payments, set up a payment plan.
Step-by-Step Selection Guide
Step 1: Calculate Your Monthly Disposable Income
Formula: Monthly Income - Allowable Monthly Expenses = Disposable Income
- If $0 or negative → Consider CNC
- If $1-$100 → Consider OIC or CNC
- If $100+ → Consider IA or OIC
Step 2: Assess Your Asset Equity
Add up the equity you have in:
- Real estate (home value - mortgage = equity)
- Vehicles (value - loan = equity)
- Bank accounts and investments
- Retirement accounts (usually protected)
The IRS expects you to use available assets to pay your debt before qualifying for relief programs.
Step 3: Run the Qualification Test
Use our dashboard qualification tool to input your financial data and see which programs you're eligible for. The system automatically applies IRS guidelines to determine your options.
Common Scenarios
Scenario 1: Low Income, No Assets
Income: $2,500/month | Expenses: $2,600/month | Assets: None | Debt: $25,000
Best Option: Currently Not Collectible (CNC)
You have negative disposable income and no assets. The IRS will temporarily pause collection until your financial situation improves.
Scenario 2: Modest Income, Small Payment Possible
Income: $4,000/month | Expenses: $3,500/month | Assets: $5,000 equity | Debt: $30,000
Best Option: Offer in Compromise (OIC)
With $500/month disposable income, you can only pay $30,000 over 60 months ($36,000 total), but your assets add $5,000. Your reasonable collection potential is ~$41,000. An OIC might settle for $15,000-$20,000.
Scenario 3: Stable Income, Can Afford Payments
Income: $6,000/month | Expenses: $4,500/month | Assets: $10,000 | Debt: $40,000
Best Option: Installment Agreement (IA)
With $1,500/month disposable income, you can pay the full debt over 27 months. An installment agreement stops penalties and prevents collection actions.
Ready to Get Started?
Take the next step:
- Go to your dashboard and complete the financial qualification tool
- Review your personalized program recommendations
- Start your application for your recommended program
- Access step-by-step forms and guidance