Worksheets
Tool 3: Resolution Decision Tree
Use a resolution decision tree to explore IRS payment plans, hardship status and settlement options based on your financial circumstances.
Book by Justus D Eapen · The IRS Is Not the End of the World · professional review pendingThis page’s Source Notes and review status1 min read
Review status: book guide, pending professional review. This text has not yet been reviewed by an enrolled agent, CPA, or attorney. It is general education, not advice for your situation. Figures, forms, and thresholds change; verify them on IRS.gov.
Work through these in order. Stop at the first branch that describes you.
- Is the number wrong, or is the debt not yours? If yes: Chapter 5 (reconsideration, replacing a substitute return, lost payments) or Chapter 13 (innocent spouse). Fix the number before choosing how to pay it.
- Are all required returns filed? If no: file them first. Nothing else is available until you do.
- Is any tax period within a few years of its collection deadline? If yes, and your disposable income is zero or negative: Chapter 11, CNC status, and stop filing things that stop the clock.
- Is your disposable income positive, and can it pay the full balance before the collection deadlines? If yes: Chapter 9, an installment agreement. Streamlined if the balance is at or under the current limit; otherwise with a financial statement.
- Is your disposable income positive but too small to pay in full before the deadlines? Compute your offer potential (equity plus 12 or 24 months of disposable income). If it is well below the debt and you can raise the lump sum from outside your finances: Chapter 10, an offer. If you cannot raise it: Chapter 11, a partial payment agreement.
- Is your disposable income zero or negative, with deadlines far off? Chapter 11, CNC status. If you are elderly, disabled, or your only asset is a home you cannot borrow against: also consider an effective tax administration offer, Chapter 10.
- Do you have large reachable equity? Expect the IRS to want it applied. A plan funded by borrowing or a sale, or a payment plan with the equity addressed, is the realistic path.
- In every branch: request First Time Abate on the year with the largest penalty, and reasonable cause relief where you have a documented reason. Chapter 12.
- Is there payroll tax, a revenue officer, possible criminal exposure, or a bankruptcy dimension? Consult a professional before taking any step above. Chapters 13, 17, 18.