IRS Forgiveness Program: What Are Your Options?

November 15, 2021
Being in debt is always scary, but owing money to the IRS can be especially nerve-wracking because they have collection powers that go beyond those of most lenders. What’s more, it’s very hard to get your tax debt written off because the government believes that you should be able to pay what you owe, regardless of your situation. Fortunately, you can expect some relief from the IRS forgiveness program if you genuinely can’t come up with the funds.

There are a number of different solutions available to people struggling with tax debt, and they all offer different benefits. While some of them will allow you to make a fresh start or reduce the amount you need to pay, others simply spread out the payments over a longer timeframe. Today, let’s have a look at all the different options, whether you might be eligible, and how you can access the help you need.

What Can You Do When You Have Tax Debt? 

Having a lot of debt can feel overwhelming, and you may not know where to start. In fact, many people ignore the problem in the vain hope that it will go away. This can be very counter-productive because you’re accumulating interest on your debt on a daily basis. What’s more, there is a penalty that is applied every month, and it can amount to 25% of your total balance if you don’t act fast.

The best thing to do is to get in touch with a tax resolution specialist. There are several ways out of your situation, but it will be hard for you to access them on your own. Not only will your professional know all the different programs that can help you out, but they can also analyze your individual situation and make a decision about which one will be the most advantageous.

The IRS Forgiveness Program 

In general, the IRS believes that you will be able to pay the whole balance you owe, since you earned money or otherwise made a financial gain. However, this can be tricky, particularly if you have lost your income due to the Coronavirus pandemic or a personal event in your life. In recent years, many people have been struggling, and the situations are often not very clear-cut.

For this reason, the IRS has created some forgiveness options that can help you to resolve the problem. There are several that reduce or even eliminate your debt, but they are hard to gain access to. If you still have some income, you might be better off with an installment agreement, which spreads out your payments. Your tax specialist will help you to decide which program you will be able to participate in.
 

Installment Agreements 

People who still have a moderate to high income may not be able to get their taxes written off because the IRS knows that they might be able to pay them. If this describes your situation, you could be well-served with an installment agreement. This stipulates that you still have to pay the full balance, but you will have more time to do this.

Because you also have to pay your current tax bill and you have all your regular expenses, it might be unrealistic to expect you to pay everything you owe at once. By spreading out the expense over a much longer timeframe, you can meet your obligation more easily and without so much stress.

Innocent Spouse Relief 

Sometimes, you might encounter a problem due to your spouse’s lack of responsibility. They could have overstated their expenses, claimed back taxes for an item that wasn’t eligible, understated their income, or otherwise committed an error that has led to significant tax debt and issues with the IRS. If you didn’t know about this problem and you weren’t involved, you shouldn’t be held responsible for it.

In such a situation, you can claim innocent spouse relief. This absolves you from the responsibility of paying for your partner’s mistake, whether you are still married or in the process of getting a divorce. To access this program, you’ll need to prove that you didn’t know about the problem before the taxes were filed and that you didn’t have any reason to suspect your spouse.

An Offer in Compromise 

Sometimes, you might not be able to pay what you owe, no matter how hard you try. Your tax specialist will suggest an offer in compromise, which means that you offer to pay the IRS less money. If they believe that you will never be capable of paying the full amount, they are likely to accept this, which will lighten your tax burden considerably.

In fact, you might only have to pay off around half of your debt. However, it’s important to note that offers in compromise aren’t always accepted. If there is any doubt, the IRS may insist that you pay the full balance.

Currently Not Collectible Status 

The most comprehensive option in the IRS forgiveness program is filing for “Currently not collectible” status. This is a great option for people who are out of work at the moment and do not have the means of paying their taxes at all. Those who are struggling to afford the cost of living might also be eligible. Unfortunately, this status doesn’t erase your tax debt, and it simply defers it.

If your situation suddenly changes in the next few years, the IRS is likely to still come after you and demand the money you owe them. For this reason, you’ll have to come up with a long-term plan and keep in touch with your specialist, who can help you monitor your status.

Getting Your Fees Removed 

Taxpayers who have never been in trouble with the IRS before may have their fees and penalties removed from their total bill. Since these can be as high as 25%, this could be a great step in the right direction. Ask your tax professional about the kinds of fees you owe and whether there is any chance of them being removed. That way, you’ll only have to pay the tax you actually owe.

How Can You Access these Solutions? 

It’s not always easy to access these forgiveness programs, and the process of finding a solution with the IRS can be stressful. For this reason, you should always speak to a professional in the field, who will have the knowledge and expertise you’re missing. They can assess your situation rationally and then help you make the best decision.

If you have a lot of tax debt and aren’t sure how to pay it off, you might not see an easy way out of your situation. But there are solutions available for everyone, and the IRS forgiveness program can help you to restart your life and get back on track. There is a variety of options available, each of which will suit a different kind of person. To find out which program is the best fit for you, get in touch with a good tax resolution specialist.

Such a professional can help you sort through your situation and figure out where to go from here. They will speak to you about the different forgiveness programs, and together, you will decide which one is the most appropriate. Once you’re all sorted, your specialist can work with you to stay on track during future tax years. Call us now at Geaux Tax Resolution to book your initial consultation with one of our tax professionals.