What is the best solution to solving my tax debt when you can’t pay? 5 Answers as of January 30, 2012

What does your bankruptcy attorney recommend? The IRS has a new streamlined installment agreement plan in place for taxpayers owing less than $50,000.

Your best bet is to retain a tax attorney to get you into uncollectible status. But you have to be able to afford a tax attorney to get this assistance.

File an application for an Offer in Compromise of the debt, it might get written off. You can also ask for a payment plan and show the IRS how little you can afford to pay, after about ten years of not be able to collect it all the IRS would undoubtedly write off any amount still due.

Have an attorney prepare an Offer in Compromise. The IRS can put you on a payment plan based upon your income and expenses.

File a request for an installment payment agreement (to allow you to pay over time) or an offer in compromise (to pay less than the amount owed). Either of them uses a formula to determine how much you need to live on and then requires you to pay the excess to the IRS. The offer in compromise requires you to pay what is essentially your net worth plus sixty months worth of the difference between what you make and the allowable expenses; this almost always requires you to borrow from a friendly party. The IRS also accepts only a small percentage of offers in compromise that it receives. In some circumstances, you can get them to put you on uncollectible status which stops there collection activities for a while but does not reduce the tax owed.