The Reality of Tax Debt Forgiveness
When you’re facing a tax problem, your first question may be, “Can my debt be forgiven?” The short answer is yes. Many forms of debt forgiveness, tax included, exist for individuals with limited resources. And while you may have several different debts that you’re juggling, you should always focus on paying Uncle Sam first. Before we examine some pitfalls to avoid, let’s discuss how you can go about getting your debt forgiven.
IRS Tax Debt Forgiveness in General
While the IRS expects you to pay any balance immediately, you may find yourself in a financial position that makes this impossible. IRS forgiveness of debt exists in many forms, depending on the specifics of your finances. Although the IRS doesn’t have a 100% “tax forgiveness” policy, you may qualify to get a portion of your balance reduced. For example, you may qualify for an Offer in Compromise (OIC), which allows you to settle your debt for far less than you owe. However, an OIC can be difficult to qualify for and you’ll be required to provide a detailed expense analysis to the IRS. This option is best explored with the assistance of a licensed tax professional who can quickly determine the likelihood of your eligibility. A tax professional may conclude that you qualify for a very different type of IRS tax forgiveness program.
IRS Forgiveness of Debt by Default
There is a chance that your tax professional will conclude that you can’t afford to pay anything towards your tax debt. If this is the case, you may qualify for Currently Not Collectible (CNC) status. While not an official IRS debt forgiveness program, CNC status prevents the IRS from actively pursuing action against you. Essentially, all collection efforts are suspended until you’re in a position to begin making payments. Since the IRS only has ten years to collect on your debt from the date it was assessed, it’s possible that you won’t pay anything if your financial position doesn’t improve.
Beware the “IRS Forgiveness Letter”
Although there are many legitimate ways to resolve your tax issue, there are many scam artists who may take advantage of your unfortunate situation with the IRS. While you should heed any official letter or notice sent through the mail by the IRS, watch out for phony versions sent by scammers. Likewise, don’t respond to any “IRS forgiveness of debt form” sent to you via email. Lastly, if you receive any calls from individuals claiming to be from the IRS, hang up the phone. The IRS will not attempt to reach you by phone or email; you should always expect an official IRS notice to arrive by post.
Income Tax Forgiveness Professionals
You want to avoid scam artists, but you also want to seriously consider consulting with a professional tax resolution company before dealing with the IRS. Conduct your research on any company you’re thinking of contacting by reading online reviews and verifying that the organization in question has licensed tax professionals such as CPA’s and Enrolled Agents. A licensed tax professional such as one from the Tax Defense Network can help you carefully weigh your resolution options, including every tax forgiveness program available to you.