Can I renegotiate a payment plan or qualify for an compromise offer due to a job loss?

Question

I negotiated a payment plan for back taxes while both my wife and I were employed, then I lost my job almost immediately, cutting our income by more than 50%.

Answer 1

All you can do is ask.  Give the IRS a call - they might redo the payment plan.

Answer 2

You may be able to renegotiate your installment payments if you can show you have no savings in which to pay with and that you may not be able to get a job for an extended time period.

Forget about the Offer In Compromise.  That is only for when you have no assets you could sell to pay them and no credit and no job or hope of a job for an extended period.

Answer 3

Contact IRS at 1-800-829-0922 or 1-800-829-7650; you could request to be put on "currently not collectible status" int/pen continue to accrue, and you will receive a yearly reminder of the balance due.

IRS Procedures: Collection Procedural Questions

I am unable to pay my delinquent taxes. Will the IRS accept an Offer in Compromise?

You may qualify for an Offer in Compromise if you are unable to pay your taxes in full or if you are facing severe or unusual economic hardship. Refer to Tax Topic 204, Offers in Compromise, for additional information.

If you are unable to make any payment at this time, please have financial information available (i.e., pay stubs, lease or rental agreement, mortgage statements, car lease/loan, utilities) and call:

Individual taxpayers may call 1-800-829-1040

Business taxpayers may call 1-800-829-4933 to receive assistance.

You have rights and protections throughout the collection process. If you would like some printed information on "your rights as a taxpayer," making arrangements to pay your bill, installment agreements, and what happens when you take no action to pay, refer to Publication 594 (PDF), The IRS Collection Process, and Publication 1, Your Rights as a Taxpayer.

Answer 4

Your payment was based on your income at the time you entered into the agreement.  This has obviously changed so call IRS and tell them.  

An Offer in Compromise would be based on your historical earnings, not what you are stuck with while temporarily unemployed.