Are you looking for the answer to the question “Does The IRS Offer One TIme Forgiveness“? If so, this post should help. Read below about programs the IRS has to help resolve your tax debt.
At any given time, there are nearly 1 million U.S taxpayers that owe the IRS. Although the IRS attempts to collect every cent that taxpayers owe the government, the reality is that they just do not have the resources for pursuing every individual person in debt. However, IRS collections remains a very stressful situation.
The IRS has tax debt relief programs available that taxpayers can take advantage of when owing back taxes. These programs not only provide a little help towards taxpayers, but it lightens the IRS’s workload. You may not be required to pay the entire amount owed, good news right?
Tax Debt Forgiveness
There are commercials that come on late at night promising to get you out of debt with tax debt forgiveness, even when thousands are owed to the IRS. Although, the reality is there is no straight debt forgiveness program.
Although, depending on the criteria of your situation you may be able to wipe your tax debt. For instance, by law the IRS is unable to collect a debt older than 10 years. Therefore, if your tax debt is from over 10 years ago, it should be forgiven, as the government is not legally able to collect the debt.
In addition, the IRS typically does not collect a debt with a low Realistic Collection Potential (RCP). An account is stated to have low RCP if the following factors are true:
- Low income amount
- No way to make payments
- No assets that can be sized or liquidated, such as real estate or bank accounts
If any of the above criteria are met, you may find that your account is marked RCP. Although this is not technically a debt forgiveness, the IRS simply does not attempt to collect the debt owed, usually.
Also, the Non-Collectable Status restricts the IRS from collecting a debt, similar to the RCP. What this means is, you do not have the assets or money available to pay the debt. This program was designed with the concept of providing taxpayers enough time to earn the money or get a higher income to pay on the debt.
Although, in some situations this collides with the amount of time the IRS is able to legally collect the debt. Therefore, once a Non-Collectable account reaches the 10-year mark, the debt can no longer be demanded by the IRS.
Finally, when a taxpayer files for Chapter 7 bankruptcy, the IRS is unable to pursue a debt collection against the individual. Although rare, there are situations where bankruptcy allows for tax debt forgiveness.
The IRS cannot make contact with you or try to collect on a debt during a pending case. If a court rules a tax debt has to be forgiven, the IRS is no longer able to pursue future action against the past tax debt.
The Fresh Start Program
These are available options that actually exist, mostly used by individuals wanting their debt forgiven. Although, the required criteria to get debt fully erased can be very time consuming and stringent. For those wanting to settle debts in a timelier manner, the IRS’ Fresh Start Program is an option.
Under the Fresh Start Program, the Partial Payment Installment Agreement option is the most used. With the PPIA you are allowed to setup an affordable payment plan for your account, which runs until the debt is fully paid or the debt account has reached the 10-year mark.
Offer In Compromise
Another option you may also choose to pursue an Offer in Compromise, which enables you to settle a debt. The following factors are used to determine if an account qualifies:
- Fully in compliance with IRS
- Owe new debt
- Cannot or have no intention to file for Chapter 7 bankruptcy
- Never turned down for OIC before
You can use the IRS website to file for an OIC, or have a tax professional assist you with the process.
The IRS acknowledges that they are unable to collect every amount of a delinquent account, with nearly a million taxpayers owing a debt. You have the potential for having your debt reduced, or possibly erased with one of the several debt relief programs available.