One of the programs that the IRS offers to those who cannot pay their tax debt is through Tax Debt Forgiveness. Under this program, there are four different ways that the IRS can drop your tax balances. Finding the best option for you depends on different factors.
See our video explanation below, then keep reading for more information:
If you owe the California Franchise Tax Board, also see our guide on CA FTB tax debt forgiveness.
Offer In Compromise is the most favored option in the majority of cases. Some might also call an Audit Reconsideration tax debt forgiveness, but we will cover that in another article.
Picking the right option is key to getting your tax debt resolved. I would not throw “Fresh Start” into this as forgiveness but it did help relax the rules.
An Offer In Compromise is settling for less than you owe. The golden ticket out of tax debt.
Your OIC will be based on:
Not everyone qualifies but many people do! If income is low but they have assets. They may instead end up filing for Currently Not Collectible Status. CNC is sometimes the best option. If you are not sure having a qualified tax attorney handling your case would help. There are also doubt as to liability Offers, but those are tough!
Often considered the second best to Offer In Compromise. You might have some assets, but at the end of the month you have not a lot, if any left over. You might just stay in this status if your income stays the same or lower. The IRS only has so long to collect.
Debt Expiration = Indirect Tax Debt Forgiveness!
Avoiding the debt and being out of the country can create a different type of CNC that will extend the IRS statute of limitations.
Penalty Abatements are granted by the IRS for “reasonable cause.” The exception is on the first year. First time penalty abatements are usually easy to get as long as the requirements are met. To get a penalty abatement you typically have to pay it off, pay it off besides just the penalties, or be in a payment plan.
This way of tax debt forgiveness is often not discussed with others because it is more difficult to get at times than just doing an Offer In Compromise.
Conditions for innocent spouse approval:
Basically you are saying this is all your spouse or ex spouse’s fault and you should not be held liable for the debt.
If you think you could benefit from the help of a tax attorney, schedule a consultation with one of our expert tax attorneys here or call us at (888) 515-4829.
We order the information, check it all out, file what needs to be filed, and proceed on the best resolution.
If we cannot help you we’ll tell you. No false promises for settlements. We only submit settlements that can be accepted.
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