If you’ve exhausted all of your available options and you simply can’t pay what you owe the IRS, then you may be eligible to enter into an agreement with the IRS to pay a reduced lump-sum amount or to enter into an installment payment agreement. An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. The IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment in certain circumstances. The payment offer can be made in a lump sum (which is considered to be five or fewer installments) or in periodic payments over 24 months, or perhaps longer depending on your circumstances. For more information about the program, eligibility requirements and how to file, consult IRS Form 656 Offer In Compromise.