Choosing the wrong option to settle your tax debt can be a very costly error. If you apply for an installment agreement, when you could have eliminated some of your debt with an Offer in Compromise, it could end up costing you thousands, and you can’t expect the IRS to notify you of your alternative settlement options. They will simply accept your payments, while you are forced to take on debt or deal with other financial difficulties in order to pay off your tax debt.
There are several options available to settle your tax debt. While this is by no means an exhaustive list, many taxpayers will be able to use one or more of these methods to reach a tax debt settlement.