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Understanding The IRS' Tax Forgiveness Programs

Nov 24

The Internal Revenue Service (IRS) has multiple programs that enable taxpayers to have their taxes either forgiven or decreased. If you are struggling to pay your taxes because of an unanticipated event, like losing your job or unexpectedly high medical bills, these programs may be able to assist you. Understanding what these programs exist and how they work can help you make a more educated determination about what you owe in taxes.

What Are IRS Tax Forgiveness Programs?

The IRS currently offers four different types of forgiveness programs.

  • The first is the Offer in Compromise (OIC) program, which allows individuals and businesses to settle their tax debt for less than the full amount owed. This option is available to those who can demonstrate that they cannot afford to pay the full amount of taxes due. If your OIC is accepted, it will be based on an evaluation of your income, expenses, and assets.
  • Another program is the Currently Not Collectible status (CNC). This allows taxpayers who can’t afford to pay their taxes due to financial hardship to have their debt put on hold while they get back on their feet financially. Typically, this option will be available if you do not have any funds available after paying the necessary living expenses. During this time, interest and penalties will continue to accrue but collection action against you will be suspended until your financial situation improves.
  • The third type of program is the Partial Pay Installment Agreement (PPIA). This option allows taxpayers with significant tax debts to repay a portion of what they owe over time via an installment agreement with the IRS. This payment plan can last up to 72 months and may reduce or eliminate any penalty fees associated with late payments or non-payment of taxes.
  • Finally, there’s the Penalty Abatement Program which waives some or all penalty fees if you can prove that you were unable to make timely payments because of circumstances beyond your control such as illness or natural disaster. You must still make arrangements with the IRS for repayment of any outstanding balances in addition to requesting penalty abatement.

Who Can Apply For An IRS Tax Forgiveness Program?

If you're someone who can't afford to pay the IRS what you owe them, it might be a good idea to look into some type of payment plan or tax forgiveness program.

If someone cannot afford to pay their taxes, the IRS legally cannot force them to. Nevertheless, the taxpayer must first show evidence of why they are unable to make payments.

Although the IRS won't wash away all of a taxpayer's money troubles if they can't fully pay their debt, some options allow them to pay less. These are unfortunately quite rare.

Is The Debt Forgiveness Program A Viable Solution?

The IRS offers various debt forgiveness options, and it's a good idea to explore them if you owe the agency a significant amount of money. If you don't take action, your situation is likely to grow larger and more complicated, with potentially severe consequences such as fees, penalties, fines, liens, levies, and other measures.

Can The IRS Forgive Tax Debt?

If the IRS had a Debt Forgiveness Act, it would be much easier to answer this question. However, since the IRS deals with taxpayers individually, one person's tax debt could be forgiven while another person may have to pay their debt in full. The reason for this is that the agency only absolves tax debt when it deems it appropriate.

The IRS is unlikely to forgive your entire tax debt unless you can prove that paying it would cause undue hardship.

Are There Any Negative Repercussions For Selecting The Debt Forgiveness Program?

Many taxpayers choose not to reach out to the IRS or a professional for help because they assume that doing so will result in further penalties. However, this is untrue! The IRS understands that mistakes happen, and they are more than willing to work with you to find a resolution. So if you're struggling with tax debt, don't be afraid to ask for help—you won't be penalized for it.

Do You Need Professional Help For The IRS Tax Forgiveness Programs?

It's recommended that you seek professional help if you're considering utilizing one of the available IRS debt forgiveness programs. A tax attorney or accountant can provide expert advice and assistance in creating a repayment plan that will work for your financial situation. They can also guide you through the application process, helping to ensure that all the necessary paperwork is completed accurately. This will give you the best chance of having your request approved by the IRS.

In conclusion, there are various types of IRS tax forgiveness programs available for people who cannot afford to pay their taxes due to financial hardship. Each program has different requirements as well as possible negative repercussions should certain conditions be unmet. It is important to understand all of these before proceeding with any type of debt relief program from the IRS. Seeking professional help is advised to ensure that you are using the proper program and filing all of the necessary paperwork correctly.

By utilizing one of these programs, you may be able to get the debt off your plate without having to pay it in full. However, it’s important to remember that even if your debt is forgiven, you may still be required to pay any interest or penalties that have been accrued. Therefore, it’s important to review all of the terms of the program before making any final decisions. Good luck!