IRS Decision Priority
Learn how the IRS evaluates your financial situation and determines which relief programs to offer first.
IRS Program Hierarchy
The IRS follows a specific order when evaluating relief options. They start with programs that collect the most money and move to hardship options only when necessary.
1. Full Payment
IRS always prefers full immediate payment. If you can pay within 120 days, this is their first choice.
2. Installment Agreement (IA)
Monthly payments over time (up to 72 months). IRS gets full amount owed plus interest.
3. Offer in Compromise (OIC)
Settle for less than owed. IRS only agrees if it's more than they'd collect through other means.
4. Currently Not Collectible (CNC)
Last resort - IRS can't collect anything without causing economic hardship. Collections pause temporarily.
How IRS Analyzes Your Finances
The IRS uses Form 433-A (Collection Information Statement) to evaluate your ability to pay. They calculate:
Monthly Disposable Income
Income minus allowable living expenses
Reasonable Collection Potential (RCP)
Total amount IRS expects to collect over the statute of limitations period
Asset Equity
Value of your assets (home, vehicles, investments) minus liens and encumbrances
Key Decision Factors
Disposable Income
If you have monthly income after allowable expenses, IRS expects payment plan.
Asset Equity
Significant equity in home or investments makes OIC harder to qualify for.
Economic Hardship
If payment would prevent you from meeting basic living expenses, you may qualify for CNC.
Statute Expiration
IRS collection authority expires 10 years from assessment date.
Common Decision Scenarios
Scenario: Steady Income, No Assets
IRS Decision: Installment Agreement
You can afford monthly payments but don't have assets to liquidate.
Scenario: Low Income, High Assets
IRS Decision: OIC Denied (unless willing to liquidate assets)
IRS expects you to borrow against or sell assets before accepting reduced payment.
Scenario: No Income, No Assets
IRS Decision: Currently Not Collectible
You can't afford basic living expenses. Collections pause until financial situation improves.
Get Your Personalized Recommendation
Use our tax debt analyzer to see which programs you qualify for based on IRS criteria.
Analyze Your Options