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What is the IRS Debt Forgiveness Program?

October 9, 2018

Red Rose IRS Forgiveness

If any collection action by the IRS would force a tax debtor into a financial crisis, the IRS cannot collect the back taxes.

Check for these five qualities to make sure your tax pro is qualified and the best for you.

If you owe the IRS and can’t pay, you may qualify for the IRS Debt Forgiveness Program.

Under certain circumstances, taxpayers can have their tax debt partially forgiven. When the IRS considers forgiving tax debt, the present financial condition of the taxpayer is of primary importance. That means the IRS can’t collect more than a taxpayer can pay. If any collection action by the IRS would force a tax debtor into a financial crisis, the IRS cannot collect the back taxes.

Offer in Compromise

Taxpayers that have the resources to pay only a partial amount of their tax debt can apply for the IRS government payment plan called an Offer in Compromise (OIC) to resolve the remaining amount. Depending on the financial capacity of the taxpayer, the IRS significantly reduces the total debt to an amount that the taxpayer can pay. This reduced amount can be paid in a lump sum or in fixed monthly installments.

IRS Fresh Start Initiative

To make it easier for taxpayers to qualify for an OIC, the IRS has expanded their Fresh Start initiative. Under these more flexible rules, taxpayers do not have to disclose extensive financial details to the IRS to judge their paying ability. The Fresh Start initiative for OIC offers taxpayers the following advantages:

  • The IRS now looks at only one year of future income for offers if they are paid in five or fewer months when calculating a taxpayer’s reasonable collection potential. This is down from previous four years. For agreements of six to 24 months, the IRS now looks at two years of future income instead of the previous five years.
  • Taxpayers are now allowed to make their student loans’ minimum payments for post-high school education loans guaranteed by the federal government.
  • Taxpayers may, under certain conditions, pay delinquent federal and state or local taxes in monthly installments if they cannot pay it in full.
  • The standard allowance for the Allowable Living Expense amount has been expanded. This allowance now includes credit card payments, bank fees and charges, and other miscellaneous allowances.

How to Get Help for the IRS Debt Forgiveness Program

Understanding your tax debt and dealing with the state and federal tax agencies isn’t easy to do alone, even with the IRS Debt Forgiveness Program. Luckily, there are professionals who can help you navigate your options. Call Tax Defense Network for a no-cost, confidential consultation today at (877) 588-1098.

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