For debt exceeding $25,000, the IRS isn’t legally bound to agree to streamlined settlement plan. Instead, you will need to present the IRS with your own plan to pay back outstanding debt. Refer to the guidelines for a guaranteed and streamlined agreement for clues as to what the IRS will accept, and then hire a professional to help you negotiate the terms of your debt settlement. At this level of IRS debt, you are entering Offer in Compromise territory, but the IRS will always look more favorably on those cases where they receive all delinquent taxes in full.
The IRS will ask you to file a financial statement
With this, the IRS can then determine what a reasonable repayment plan looks like. You and the IRS will have to arrive at a monthly payment figure that will allow you to pay of your debt in so many years without exceeding the statute of limitations. The IRS will also take into consideration cost of living.
The IRS may ask for you to liquidate some assets
Any assets you have that aren’t legally protected from liquidation in IRS debt negotiations—retirement accounts for instance—you will have to put up for sale.
Where IRS debt exceeds $25,000 and is aged, the IRS begins to race the statue of limitations when collecting from debtors. Since they want to collect in full before this, you may have to use money collected in the sale of your assets as a down payment. This will reduce your monthly payments to the IRS.
The IRS may ask you to take out a bank loan
The IRS may ask you to take out a bank loan to pay down the debt. Not only is this perfectly legal, but you will need to consult thoroughly with a financial professional on this second or third monthly payment, as it could further endanger your financial future. There is a lot of associated paperwork when filing for a non-streamlined IRS repayment plan, so, again it is imperative you consult a professional.