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IRS Debt Forgiveness

IRS Debt Forgiveness

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THE IRS TAX DEBT FORGIVENESS PROGRAM.

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If you’re burdened by IRS tax debt, the pressure of increasing balances and growing interest might feel unbearable. You might be wondering if there’s a way out that won’t push you into further financial difficulty. The good news is that the IRS offers debt forgiveness programs designed to help individuals like you find relief.

In this blog, we’ll explore these programs in detail, showing you how they work and how you can start the process to reduce your debt. Whether you’re struggling to keep up with payments or facing significant tax liabilities, understanding your options is important. Let’s walk you through how these forgiveness programs can help you regain control and move towards a more secure financial future.

IRS Debt Forgiveness Programs Explained

The idea of having the IRS reduce or eliminate your tax debt might seem too good to be true, but for some taxpayers, it’s a real possibility. IRS debt forgiveness programs give qualified individuals the chance to settle their tax debts for less than what they owe.

Whether you’re new to these programs or have been exploring them for a while, understanding the basics is crucial for making the best decision for your financial situation.

How Does It Work?

These programs are designed to assist those who genuinely struggle to pay off their tax debts. By offering relief, the IRS aims to recover at least a portion of the money owed, while providing taxpayers with a manageable solution to their financial challenges.

Why Is It Beneficial?

For taxpayers, it’s a chance to alleviate significant debt and regain financial stability. For the IRS, it’s a way to collect some of the taxes owed that might otherwise go unpaid.

With IRS debt forgiveness, both parties benefit: Taxpayers find relief from overwhelming debt, and the IRS secures funds that could otherwise be lost.

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What is an Offer in Compromise?

An Offer in Compromise ( Tax Debt Forgiveness ) is the way the IRS forgives tax debt for taxpayers that have balances due to the IRS.

An Offer in Compromise allows you to settle your tax debt for less than the full amount you owe to the IRS. It may be a legitimate option if you cannot pay your full tax liability, or in doing so creates a financial hardship.

IRS will consider your unique set of facts and circumstances when determining settlements for IRS debt forgiveness.

IRS mains areas of concentration for tax debt settlements are based on your:

  1. Ability to pay,
  2. Present Income and Expenses,
  3. Equity in Assets.

IRS will conduct a thorough detailed review on all income and assets.

The Offer in Compromise program is not for everyone.

You need to make sure you are eligible to file an Offer in Compromise before filing. We offer a free tax consultation on your case before the contemplation of an Offer in Compromise.

Before IRS can consider your offer, you must be current with all tax return filings and current in withholding and estimate tax payments.

You may not file an Offer in Compromise and apply for IRS tax debt forgiveness if you are in an open bankruptcy proceeding.

How to submit your offer.

Forms necessary for IRS Tax Debt Forgiveness

  1. Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
  2. Form 656(s) – individual and business tax debt (Corporation – LLC – Partnership) must be submitted on a separate Form 656;
  3. $150 application fee (non-refundable); and
    Initial payment (non-refundable) for each Form 656.

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Who is Eligible for IRS Tax Debt Forgiveness?

The IRS decides who qualifies for debt forgiveness, but generally, they look for:

  • Tax debts of $50,000 or less
  • Income below $100,000 (or $200,000 for married couples)
  • A recent income drop of over 25% for self-employed individuals

Unsure if you qualify for tax relief? Let our experts help you figure it out. Contact us today to explore your options and find the best solution for your needs.

How Can You Qualify for IRS Tax Debt Forgiveness?

Now that you have a grasp of what IRS debt forgiveness entails, you might wonder, “How can I get my tax debt forgiven?”

Qualifying for IRS tax debt relief isn’t a walk in the park, but it’s not an insurmountable challenge either. Here’s how you can potentially qualify:

1. Assess Your Ability to Pay:

The IRS will evaluate your financial situation, including income, expenses, and asset equity. If they determine that paying your tax debt would cause significant financial distress, you might be a good candidate for relief.

2. Prepare Your Documentation:

Approach the process with thorough documentation and a clear understanding of the IRS’s requirements. If you’re uncertain about any step, consider seeking help or consulting with professionals like Michael D. Sullivan, who specializes in tax matters.

3. Explore IRS Debt Forgiveness Programs:

  • Offer in Compromise (OIC): This is a program that allows you to settle your tax debt for less than the full amount you owe. To be eligible for an OIC, you must show that you cannot afford to pay your tax debt in full and that accepting your offer in compromise would be in the best interests of the government.
  • Installment Agreement: This is one of the payment plans that allows you to pay your tax debt in installments over time. To be eligible for an installment agreement, you must be able to make regular payments and must not have any outstanding tax debts that are currently in collections.
  • Currently Not Collectible (CNC): This is a status that the IRS may grant you if you are unable to pay your tax debt in full. While your tax debt is in CNC status, the IRS will not take any collection action against you. However, you will still be liable for the debt, and interest will continue to accrue.
  • Hardship Discharge: This is a program that may be available to you if you can show that you are unable to pay your tax debt due to a catastrophic event, such as a natural disaster or a serious illness.
  • Innocent Spouse Relief: If you’re unfairly held responsible for taxes due to your spouse’s errors or fraud, you might qualify for Innocent Spouse Relief, which can remove your liability for that debt.

To qualify for IRS debt forgiveness, you need to be in good standing. This means filing all your tax returns and addressing any unpaid taxes. If you’re behind on filing, that’s the first step you’ll need to take before seeking relief.

What is an Offer in Compromise?

An Offer in Compromise (OIC) is a program that allows the IRS to settle your tax debt for less than the total amount. It’s designed for taxpayers who cannot pay their full tax liability or would face financial hardship by doing so.

Eligibility for an Offer in Compromise

The IRS evaluates your eligibility based on several factors:

  • Ability to Pay: Your financial situation and how much you can reasonably pay.
  • Present Income and Expenses: Your current income and necessary living expenses.
  • Equity in Assets: The value of your assets versus your liabilities.

The IRS conducts a detailed review of your income, expenses, and assets to determine if you qualify for an Offer in Compromise.

Key Requirements for an Offer in Compromise

Before filing an Offer in Compromise, ensure you meet these criteria:

  • Tax Returns: You must be current with all tax return filings.
  • Payments: You must be up-to-date with withholding and estimated tax payments.
  • Bankruptcy: You cannot apply for an Offer in Compromise if you are in an active bankruptcy proceeding.

To confirm eligibility, we offer a free tax consultation before considering an Offer in Compromise.

How to Submit Your Offer?

You’ll need to complete and submit several forms and documents:

Forms Required

  • Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses, along with all required documentation.
  • Form 656(s) for individual or business tax debts, with separate forms for corporations, LLCs, or partnerships.
  • A $205 application fee (non-refundable).
  • Initial payment (non-refundable) for each Form 656.

Payment Options

  • Lump Sum Cash: Pay 20% of the total offer amount with your application. After acceptance, pay the remaining balance in five or fewer payments.
  • Periodic Payment: Pay an initial amount with your application and continue to make monthly payments until the offer is paid in full, if accepted.

If you meet the Low Income Certification guidelines, you are not required to pay the application fee or initial payment, and you will not need to make monthly payments during the evaluation period. Check your application package for details.

What to Expect While Your Offer is Being Reviewed?

During the evaluation process:

  • Your non-refundable payments and fees will be applied to your tax liability.
  • The IRS may file a Notice of Federal Tax Lien, which is a public record of your unpaid tax debt.

List of IRS Tax Resolution Forms and Their Descriptions

To successfully apply for one of the IRS debt forgiveness programs, you may need to submit specific forms. Here’s a breakdown of the most common forms and what they’re used for:

  • Form 433-A: For wage-earners and Schedule C businesses seeking an installment agreement or hardship status, and working with an IRS revenue officer.
  • Form 433-A (OIC): For wage-earners and Schedule C businesses seeking to settle their tax debt for less than what’s owed.
  • Form 433-B: For C-corporations, S-corporations, and partnerships seeking an installment agreement or hardship status, and working with an IRS revenue officer.
  • Form 433-B (OIC): For C-corporations, S-corporations, and partnerships seeking an installment agreement or hardship status.
  • Form 433D: Installment agreement request form.
  • Form 656 & Form 656-L: Part of the package for an Offer in Compromise.
  • Form 843: For taxpayers seeking to reduce penalties.
  • Form 8857: Request for innocent spouse relief.
  • Form 12153: Request for a collection due process or equivalent hearing.
  • Form 433F: For wage-earners and Schedule C businesses seeking an installment agreement or hardship status and working with the automated collection system.

If you need assistance with any of these IRS debt forgiveness programs or help navigating the necessary forms, Mr. Michael Sullivan and his team are here to guide you every step of the way. Reach out to us today for expert advice and support.

Here’s How Michael Sullivan Can Help!

Struggling with IRS tax debt can be incredibly stressful and confusing. Many people find themselves overwhelmed by escalating penalties and interest, unsure of how to resolve their tax issues effectively.

Our team is comprised of tax attorneys, certified public accountants, and former IRS agents who know the system inside and out. With over 206 years of combined professional tax experience and more than 60 years of direct IRS work in local, district, and regional offices, we bring unparalleled expertise to your case.

The IRS has updated its “Offer in Compromise” Debt Forgiveness Program. Last year, about 78,000 offers were submitted, with a 41% acceptance rate. This program allows eligible taxpayers to settle their debt for less than the total amount owed, with average settlements of around $6,500. Professional tax firms played a significant role in the accepted offers, highlighting the importance of expert guidance.

Recognizing the difficulty taxpayers face in paying off their debts, the IRS introduced the Fresh Start Program to offer more flexible terms for debt forgiveness. This program aims to make it easier for individuals to settle their tax debts and move forward.

Having former IRS agents review your case offers a significant advantage. Our team’s deep understanding of IRS tax policies and internal settlement procedures ensures that you receive the best possible advice and representation.

Our firm includes Board Certified Tax Attorneys, CPAs, and former IRS agents, managers, and instructors who have taught Tax Law at the IRS. We also have former IRS Revenue Agents on staff who have worked on and instructed the IRS Debt Forgiveness Program, known as the Offer in Compromise.

With our extensive experience and insight into IRS protocols, we are well-equipped to help you navigate your tax debt situation and work towards a favorable resolution.

Don’t know what you qualify for? Trust the professionals! Book your free consultation now!

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Things to keep in mind about IRS debt forgiveness programs

  • These programs are not automatic. You must apply for them and the IRS will make a decision based on your individual circumstances.
  • The IRS may require you to make a down payment or to provide security for the debt.
  • You may still be liable for interest and penalties on the forgiven debt.
  • These programs can be complex and time-consuming to apply for. It is important to consult with a tax professional to discuss your options.

Here’s How Michael Sullivan Can Help!

Struggling with IRS tax debt can be incredibly stressful and confusing. Many people find themselves overwhelmed by escalating penalties and interest, unsure of how to resolve their tax issues effectively.

Our team is comprised of tax attorneys, certified public accountants, and former IRS agents who know the system inside and out. With over 206 years of combined professional tax experience and more than 60 years of direct IRS work in local, district, and regional offices, we bring unparalleled expertise to your case.

The IRS has updated its “Offer in Compromise” Debt Forgiveness Program. Last year, about 78,000 offers were submitted, with a 41% acceptance rate. This program allows eligible taxpayers to settle their debt for less than the total amount owed, with average settlements of around $6,500. Professional tax firms played a significant role in the accepted offers, highlighting the importance of expert guidance.

Recognizing the difficulty taxpayers face in paying off their debts, the IRS introduced the Fresh Start Program to offer more flexible terms for debt forgiveness. This program aims to make it easier for individuals to settle their tax debts and move forward.

Having former IRS agents review your case offers a significant advantage. Our team’s deep understanding of IRS tax policies and internal settlement procedures ensures that you receive the best possible advice and representation.

Our firm includes Board Certified Tax Attorneys, CPAs, and former IRS agents, managers, and instructors who have taught Tax Law at the IRS. We also have former IRS Revenue Agents on staff who have worked on and instructed the IRS Debt Forgiveness Program, known as the Offer in Compromise.

With our extensive experience and insight into IRS protocols, we are well-equipped to help you navigate your tax debt situation and work towards a favorable resolution.

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