Let's say you owe the IRS $10,000. The penalties and interest can double that tax to $20,000 in less than three years. It is the worst credit that you can imagine. I tell people who don't qualify to settle their debt to get the money from any other source; do a home equity loan, a loan through a credit union, a signature loan, credit card loan, or whatever you can do. I try to help my clients with that. If they say they owe $20,000 to the IRS, the penalties and interest are not tax deductible. If the person makes a $20,000 home equity loan, not only is the interest much less but now it's tax deductible. I tell them promptly if they don't qualify and then I will give them the best way to handle their payment to the IRS.
