A tax payment plan is a great idea if you can pay the IRS every month and you are employed. But is this something that everybody can do? Absolutely not. Some people cannot commit to a payment plan (called an IRS Installment Agreement) because of severe financial strain. There may be an option to take advantage of. If you cannot pay taxes due to a lack of money you will have to convince the IRS that you are currently uncollectible. This is not always simple to do on your own, so you may want to hire a tax attorney to assist you. Convincing the IRS that you cannot pay taxes is never an easy task because they want their money regardless of your situation.
If the IRS agrees that you are "Currently Uncollectible" they will usually give you one year to get things in order. For most people this is usually enough time to straighten up and get their finances back on track. Remember, just because you are not paying the IRS anything for one year it does not mean that things will stay this way. You will eventually have to get on a tax payment plan that allows you to pay back your debt. In other words, your debt will be waiting for you once your status changes.
After 12 months, if your situation is the same, the IRS may allow your account to stay in uncollectible status. Of course, you will have to prove your financial hardship to them once again. Or you will have to show that things have not improved for you (i.e. you are still unemployed or facing a severe medical condition). It can be difficult to maintain a normal lifestyle while also attempting to keep your account uncollectible.
If you are truly in a difficult situation the IRS will do what they can to help you out. Believe it or not, the IRS is not evil. They want taxpayers to pay what they owe, but they also have programs in place, such as Installment Agreements, that make this as simple as possible.
When you cannot pay taxes you have to prove to the IRS that you are uncollectible. By doing this you will buy yourself some time to get your money in order. Eventually, if things improve you can enter into an IRS Installment Agreement.
