In general, the Internal Revenue Service (IRS) has 10 years to collect outstanding tax debt. After that, the debt is erased from your books and the IRS cancels it. This is called a 10-year statute of limitations. It is not in the financial interest of the IRS to make this law widely known.
The closest thing to the forgiveness of the tax debt is the Pledge Offer or the ICO. Basically, this is a settlement agreement that you entered into with the IRS. An ICO allows you to pay much less than you actually owe to resolve your tax debt. It has been audited by the Internal Revenue Service (IRS) and it has been determined that it owes money to the government.
So, you may be thinking that you are now in debt forever. However, that's not exactly the case. Although not widely shared by the IRS, every IRS audit tax debt has a collection law expiration date (CSED). Generally speaking, the IRS has 10 years to collect an unpaid tax debt, after which the debt is canceled.
Towards the end of the CSED, the IRS tends to be more aggressive in its collection efforts, hoping that the taxpayer will pay as much as possible before the deadline or agree to extend it. Once this 10-year period or statute of limitations has expired, the IRS can no longer attempt to collect the balance owed by the IRS. However, it's important to note that the IRS will take a good look at your finances before accepting you into the program. If there were a Debt Forgiveness Act that IRS agents could follow, it would be much easier to answer this question.
Yes, in fact, the period of time that the IRS can collect a tax debt is generally limited to ten years, in accordance with the IRS collection statute of limitations. For an assessment of the tax debt on a tax return you filed (or on a substitute return that the IRS prepared on your behalf), this is the date the IRS recorded the amount of your taxes due and you can find it in your tax file. Considering the various debt forgiveness options offered by the IRS is a good idea if you owe them an amount of money. Having a tax debt isn't the end of the world, as the IRS offers a handful of useful programs that you can actually qualify for.
When the ten years have passed, the IRS is required to cancel the debt as a bad debt, essentially forgiving it. When your tax debt is currently in a non-collectible state, the IRS will review your situation annually and, if your circumstances do not change, your debt will remain in this state until the statute of limitations expires, at which point the IRS will cancel the remaining balance. The IRS can't prosecute you forever, and because of the IRS Reform and Restructuring Act of 1998, taxpayers are a little relieved by the IRS collection division's quest for a balance due. From there, you're likely to fill out an IRS debt forgiveness form that describes your situation financial.
The IRS Fresh Start Program is another term for the agency's various debt forgiveness options.
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