If the IRS is in doubt that they will be able to collect the whole amount it is better that they collect just a part of it than collect nothing at all. If you want to settle IRS debt without paying the full amount of debt, you can utilize the method offer in compromise. This type of settling tax debt allows the tax payers to pay less than what is actually owed. This program is usually honored by the IRS if an individual is considered incapable of paying the whole debt.

Applying for an offer in compromise requires an individual to fill out several forms. Form 656 is the form you need to fill out for the offer in compromise alone. This from should be accomplished with forms 433-A and 433-A worksheet. These additional forms include the collection information and the calculation of the payment you need to pay the IRS instead of the actual amount owed.

Like other policies and programs of IRS to help people in settling IRS debt, the offer in compromise has its terms and conditions. An individual who filed an offer in compromise should pay the amount that is required by the IRS. He is also required to file and pay his tax returns on time for the next five years. Further more an individual who has filed an offer in compromise will let the IRS keep any tax refund, payment and other credits that will be applied on the tax debt before the offer in compromise is submitted and during the calendar year when it is approved. If he or she fails to fulfill the terms and conditions imposed by the IRS the policy may be revoked. This means that the IRS will require the individual to pay the whole debt and would receive no excuses.

If you plan to file an offer in compromise as a method of settling tax debt, you should be certain that you are capable of paying the payment required and adhere to its terms. If you are in doubt, you should reevaluate your options and find a more appropriate solution to settle IRS debt.