Having a tax debt can be challenging, but it is not the end of the world. You can get some debt relief under the IRS forgiveness program when you are unable to pay your tax burden under specific conditions.
The IRS looks at your current financial situation before deciding whether to forgive your tax debt. This implies that the IRS cannot demand more money from you than you can afford. They cannot collect the overdue taxes if taking any collection action would put the taxpayer in a situation where they would lose any sense of financial security. However, the question still looms does the IRS have a debt forgiveness program?
How is the IRS debt forgiveness program useful?
While there is no complete IRS debt forgiveness program, there are certainly some attractive programs you might be eligible for that would eliminate all or some of your liability.
OIC or Offer in Compromise
You can apply for the Offer in Compromise payment plan to resolve the pending debt amount. The IRS considerably decreases the total amount of debt you can pay depending on your financial situation and upon acceptance. This decreased cost may be paid in one lump sum or through set monthly installments. However, the IRS doesn’t give this scheme easily as it takes into account your ability to pay, income, costs, and asset equity.
Fresh Start Initiative
The IRS has expanded its Fresh Start initiative to make it simpler for taxpayers to meet the requirements for an OIC. The IRS now only considers one to two years of prospective income for offers, depending on the payment period, as opposed to five years of future income to evaluate a reasonable collection possibility.
Even with such programs, negotiating with the IRS is difficult to handle on your own. Hence, speaking with a tax consultant before acting is a good idea.