My 98 K1500 was used for pulling a 5'th wheel by the previous owner and I want to put a towing package on it. I went and picked up the Reese tow package for my model truck but it won't fit correctly around the spare tire? Any ideas? Does another company make a better tow package?

Is the spare tire larger than OEM? Or you can try dropping the tire, installing the hitch and re-installing the tire. Lesser of two evils really.

It's the OEM but I think that when the 5'th wheel was on, the previous owner took off the bumper and the holes don't line up correctly for a hitch.

Bring it to a Uhaul or other and let them deal with it.