What is the difference between a “lump sum offer” and a “periodic payment offer?”

If you and your tax lawyer have successfully convinced the IRS to grant you an Offer in Compromise (OIC), you have two options: you can choose to pay your reduced tax bill in a lump sum payment, or you can ask the IRS to allow you to pay in extra installments, which is called a periodic payment offer.

“Lump Sum’ Payments Can Be Made in Up To Six Monthly Installments

Somewhat confusingly, “lump sum” doesn’t mean exactly that in the world of the IRS: you can make a lump sum payment of your OIC in up to six separate installments, with the condition that your first check includes at least 20 percent of the negotiated amount.

Periodic Payment OICs Allow You More Time to Pay

A periodic payment is when the IRS agrees that you need more than six installments in order to pay your OIC. When you and your tax lawyer make a periodic payment offer, you’ll have to include your first proposed installment (which is nonrefundable), as well as a $150 application fee. Not enough bureaucracy for you? While the IRS ponders your periodic payment offer, you’ll have to continue making installment payments on the “lump sum” plan you’re trying to negotiate your way out of, and these, too, are nonrefundable.

A Tax Attorney Can Help You Get into the Payment Program that Works Best for You

Negotiating any sort of payment deal with IRS all by yourself can be a complex and frustrating undertaking. Schedule your free consultation with our tax attorneys today by calling 800-721-7054. We serve all of Oklahoma and Texas!