If a taxpayer has insufficient financial means to pay a deficiency, the IRS may make an offer in compromise to settle for a lesser amount.

Question

Quizplus · Accepted Answer

This statement is true. The IRS does have the option to make an offer in compromise to taxpayers who are unable to pay their full tax debt. This allows the taxpayer to settle their debt for a lesser amount than what is owed. However, the IRS will only consider an offer in compromise if they believe that the taxpayer cannot pay the full tax debt through other means, such as an installment agreement.

If a Taxpayer Has Insufficient Financial Means to Pay a Deficiency