The Internal Revenue Service (IRS) is the organization responsible for collecting taxes from US citizens. If IRS agents determine, through a tax assessment or otherwise, that you have not paid enough tax and you have an outstanding balance, you will owe tax debt. In rare circumstances, however, the IRS may forgive your tax debt.
The onus is on taxpayers to assess whether they have tax debt relief options and whether there is an option for them to get their debt forgiven. The IRS is tough on taxpayers and may use harsh methods to recover tax debt, including wage garnishment and property liens. Hiring a tax professional is the best way to ensure that your rights are protected, and they can assess whether you are eligible for tax debt forgiveness.
Ronald Arthur Stearns Sr. PLLC.
Ronald Arthur Stearns Sr. PLLC has helped hundreds of clients fight against the IRS for a tax burden. If you are going through financial hardship and cannot pay off the debt that you owe, our law firm can try to get the remaining balance forgiven.
We understand the significant challenges faced by American taxpayers, particularly those who are in debt, and we want to do everything we can to help.
Petitioning the IRS to forgive tax debt requires significant expertise and skills. Our law firm has the experience and aggression you need to help get your tax debt forgiven. Ronald Arthur Stearns Sr. PLLC. has won multiple awards and recognition for his dedication to clients’ cases. You can count on us to provide the highest standard of legal care possible.
IRS Tax Debt Forgiveness Options
Most people that owe a tax debt to the IRS must pay it back within a 10-year period. If taxpayers cannot pay this debt in one lump sum upfront, they will receive additional penalties and fines.
The IRS has different methods of recovering debt from you, including wage garnishments, federal liens on your property, and levies. These methods can put you in a desperate financial situation, and many clients are left struggling to pay for day-to-day bills because of their tax debt.
There are certain circumstances that the IRS offers tax forgiveness, which is when you are offered some reduction on the debt you owe or the debt is cleared entirely. Debt forgiveness is only applied in rare circumstances, usually when a person or family shows that they are in severe financial hardship.
In 2011, the IRS introduced a Fresh Start Program, which is available to some citizens that have experienced a significant drop in their income or do not earn enough to pay back their entire tax debt. The Fresh Start Program comprises multiple tax resolution programs that citizens can sign up for, including:
An Installation Agreement is when the individual agrees to pay back all tax debt over a certain time period, including penalties and interest, provided that they do not have to submit a financial statement to the IRS. Citizens must pay the debt before the statute of limitations expires.
An Installation Agreement allows taxpayers owing up to $50,000 in debt to take out a long-term payment plan while having their financial information protected. People can pay back less money each month over a longer period, which can be a more sustainable tax burden for many people.
Innocent Spouse Relief
If your spouse or ex-spouse incorrectly reported income, failed to report income, or improperly claimed tax credits and deductions, you may be entitled to innocent spouse relief. If you submitted joint tax returns and qualify for the relief, you will avoid taxes that your spouse or ex-spouse is liable for. To apply for this relief, you must prove the following:
- You filed taxes jointly.
- The other person committed the error(s).
- You are innocent.
- You have compelling circumstances.
- You applied for innocent spouse relief within 2 years after debt collectors came after you and your spouse or ex-spouse.
When assessing whether you are entitled to innocent spouse relief, the IRS will look at whether you benefited from the tax evasion or error, how much of a part you played in the act, and fairness. If you did not file a joint tax return but are liable because of Texas’ community property rules, you may apply for equitable relief.
If applying for innocent spouse relief, you will need significant evidence to prove your innocence. The process can be quite complicated, so it is recommended that you seek legal help from a tax professional to guide you through the process.
Offer in Compromise
Offer in compromise (OIC) is a program that reduces your overall tax burden. If you owe a debt that you could never reasonably pay at once, you may apply for a reduction in the tax debt that you owe. With OIC, you agree on a reasonable amount that you can afford with the IRS, and you can pay a smaller lump sum or through payment plans.
Once you submit an application, the IRS examines your current financial situation, including your income, expenses, and current living situation. They will use this evidence to determine how you can pay back the debt you owe. If they determine you cannot pay back the original amount of debt, they will offer you debt forgiveness through a reduced burden.
OIC is the most popular form of debt forgiveness program, yet it is difficult to apply to and they accept only half of the applicants that apply each year. Tax professionals can help you with the application process and increase your chances of forgiveness.
Does The IRS Forgive Tax Debt After Ten Years?
With all IRS debt, there is a statute of limitations of ten years. This means that if you have not paid back the entire debt that you owe within this time period, your debt will be forgiven and you will not have to pay it back.
The IRS will never let people know about this limitation and it is up to you to assess whether the time has passed. Unfortunately, the ten years limitation is not as straightforward as it sounds, and there may be factors that cause your limitation to be increased.
We recommend contacting a tax professional to help figure out whether you have been paying your debt for over ten years and whether you are entitled to forgiveness.
Extending The Statute of Limitations
To know whether you have passed the statute of limitations, you need to figure out the collection statute expiration date. Although you may just look at your Notice of Deficiency and calculate 10 years from that date, it is usually not that simple.
There are certain factors that can pause the timer and extend the statute of limitations. Ultimately, whenever the IRS cannot collect unpaid tax debt from you, the timer will be paused.
Filing For Bankruptcy
Filing for bankruptcy prevents the IRS from recovering tax debt from you. When you file for bankruptcy, the process can last from four months up to a year, depending on the situation. The IRS must then wait 6 months after the process is complete before collecting tax debt from you.
This process stops the statute of limitations timer. So, if your bankruptcy process took 6 months, the statute of limitation for debt forgiveness will be extended by one year.
Collection Due Process Hearing Request
If you have received a federal tax lien on your property to recover unpaid tax debt, you reserve the right to submit a hearing request to an IRS officer. Federal tax liens are claims by the government to your property when you have unpaid taxes. You have 30 days to file a hearing requesting that the levy or lien be stopped.
During a Collection Due Process (CDP) hearing, your attorney will explain why you will face hardship with a lien and submit an alternative method to pay taxes you owe, such as an installment agreement. While awaiting a CDP hearing and until a decision is reached, the IRS will pause the clock on your statute of limitations. This extends the collection period before debt forgiveness.
Leaving The Country
If you leave the country for over 6 months, the statute of limitation clock will be stalled temporarily. When you return home, the clock will begin again. So, it is not possible to leave the country while waiting for your tax debts to pass.
Does The IRS Forgive Debt? – Ronald Arthur Stearns Sr. PLLC.
Although in very rare circumstances, the IRS provides certain methods for debt forgiveness. If you owe a significant amount of tax debts that you are unable to pay back, you may be eligible for debt forgiveness. An experienced tax professional can help assess whether you may be entitled to relief and help you apply for IRS programs.
Ronald Arthur Stearns Sr. PLLC. is a highly experienced tax attorney that has been helping Texas citizens with all IRS and tax matters for over 26 years. Our law firm has a team of attorneys that want to help you manage your debt and ensure that you are treated fairly by the IRS.
We understand the hardships faced by those with tax debt, and we will fight to get it reduced substantially on your behalf.