What if your tax debt could vanish entirely?
If you have significant IRS debt, you’ve probably fantasized about this very thing. But it doesn’t have to be a fantasy thanks to an IRS debt forgiveness program.
Wondering what this program is and how you can qualify for it? Keep reading to discover our ultimate guide!
What Is The IRS Debt Forgiveness Program?
If you’re reading this, then you want to learn about the IRS debt forgiveness program. In that case, we’ve got good news and bad news.
The bad news is that there is not a singular debt forgiveness program. The good news is that there are actually several IRS programs to help you achieve tax forgiveness.
We’ve outlined several of the programs further below. Remember, this is not a “one size fits all” arrangement, and it may take time to figure out which program works best for you and your family.
As always, we recommend consulting with tax experts to come up with the best possible solution.
Do Your Debt Homework
The next step is simple, though it can be a bit depressing. You need to figure out exactly how much money you actually owe.
This is important because most IRS debt forgiveness programs only work if you are unable to pay the amount you owe. Unless you know exactly what that amount is, you won’t be able to accurately complete the paperwork for these programs.
Speaking of paperwork, the IRS is going to need documentation of things like your debt and your income. You might as well start gathering these documents now so that you can save time in the long term.
Brace For Action
By the time you’re researching debt forgiveness plans, you’ve probably been in debt for a while. At this point, it’s important to reach out to the IRS or prepare for them to take action against you.
In order to get their money, the IRS may take a number of steps against you. This ranges from tax liens and tax levies all the way up to wage garnishment.
Keep in mind that the IRS is doing this because they think it’s the best way to get their money back. If you contact them about one of the following programs, you may be able to avoid liens, levies, and garnishments.
Without any further ado, let’s dive into the debt forgiveness programs you may be likely to benefit from.
Offer In Compromise Options
The Offer In Comprise (OIC) program is the most popular form of IRS tax relief. This lets you reach an agreement with the IRS to pay a certain amount of your debt based on your income. The rest of the debt is then forgiven.
With OIC, you don’t have to pay any of the debt in one big chunk. Instead, the amount is split into smaller monthly installments to make things easier to pay.
To determine how much you must pay, the IRS will look at your income, assets, where you live and your number of dependents. To qualify, you must have filed all relevant tax paperwork and not currently be in a bankruptcy proceeding.
This is by far the most popular form of tax forgiveness. In fact, the IRS has recently made it easier to qualify with its Fresh Start Initiative.
Currently Not Collectible
If you don’t qualify for the Offer In Compromise program, you may qualify for Currently Not Collectible status. This program has its own unique set of benefits and drawbacks.
The main drawback is that this isn’t exactly loan forgiveness. Instead, it’s the equivalent of getting forbearance on your debt. If you can convince the IRS that financial hardship is keeping you from paying your debt, they may agree to stop collecting that debt for a fixed period of time.
Now, you will still need to pay the debt back when your financial situation improves. But this status helps you avoid those nasty liens, levies, and garnishments we mentioned earlier.
And this program ends those annoying IRS phone calls. That alone makes it worth looking into!
IRS penalty abatement is, situationally, very useful. While abatement will not forgive the debt itself, it does help you avoid hundreds or even thousands of dollars in fees.
With an abatement, you must prove to the IRS that you missed out on things like filing or paying your taxes due to a reasonable cause. Afterward, you have a chance to pay what you owe without paying any kind of harsh fees.
If you’ve already paid some of those fees, you can still apply for an abatement. If you are approved, you can then request a refund from the IRS.
Innocent Spouse Request
If you filed a joint return with your spouse and the underreported their income, then you may be able to successfully file for an innocent spouse request.
As the name implies, this is for a situation where one spouse is completely unaware of the financial discrepancies of their partner. The request may cause the IRS to investigate the entire situation. If they decide in your favor, then you won’t have to pay additional tax, interest, or penalties due to your spouse’s errors.
Getting approved for innocent spouse tax relief may be time-consuming, but it’s a great way to get yourself off the hook for the mistakes of someone else.
Talking With An Expert
Needless to say, the world of taxes and tax relief is very complex and confusing. If you’re not comfortable doing everything on your own, you should consider consulting with a tax expert.
Such experts can help increase your chances of getting approved for a debt forgiveness program. Furthermore, they can offer advice for future tax filings to help you avoid ending up in debt again.
What’s Your Next Step?
When you’re pursuing IRS debt forgiveness, you don’t just need a tax expert. You need someone who is an IRS expert as well!
Fidelity Tax Relief blends IRS and tax expertise with experience and customer service. To see what it’s like to have a real debt fighter in your corner, contact us today!