The short answer is Yes, but it's best to seek professional help to get that forgiveness. Take a look at what every taxpayer needs to know about the IRS debt forgiveness program. This is just one of many procedural changes instituted by the IRS to help struggling taxpayers during this unusual period in our nation's history. Another recent change, which will survive the pandemic, improves the “start from scratch” option offered by our Offer in Compromise (OIC) program.
An OCI allows taxpayers to settle their tax debt for less than the total amount they owe. It may be a legitimate option for taxpayers who can't fully pay their tax obligations or if doing so creates financial difficulties. Under certain circumstances, the IRS will forgive the tax debt after 10 years. However, that 10-year period may be longer than expected, considering extended suspensions, the IRS tax settlement date compared to your last return, and whether or not you've kept up with your tax returns since the debt period began.
The IRS debt forgiveness program was created to help taxpayers with the complex process of forgiving tax debts and to organize an appropriate debt repayment plan. To find out if you are eligible for the IRS debt forgiveness program, your case must be examined. IRS tax debt relief or forgiveness allows taxpayers who owe unpaid taxes to reduce part of their debt, depending on their circumstances. 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.
When the ten years have passed, the IRS is required to cancel the debt as a bad debt, essentially forgiving it. Programs like this allow taxpayers who owe back taxes to the IRS or who have a debt to the IRS to settle a smaller amount. You will be given an IRS debt forgiveness payment plan to pay the full or modified amount in a lump sum or in installments. 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.
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. That fee may be higher than what you end up saving on your tax bill if the IRS accepts your transaction offer (and may not be refundable if the IRS rejects your offer). Since IRS debt forgiveness is an official way to establish a debt consolidation plan, this will be better on your permanent record. This type of program was designed as a way for the IRS to maximize the collection of the amount of tax money owed to the government and, at the same time, make it much less painful for the taxpayer.
This program does not have a guaranteed acceptance policy and it is entirely up to the IRS to offer it to any qualifying taxpayer. The government also has an IRS debt forgiveness program that offers several tax relief options. IRS debt forgiveness applies if the taxpayer can claim extreme financial hardship and if all previous tax returns have been completed.
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