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IRS Debt Forgiveness - Tax Settlement - IRS Settlement

Updated: Aug 24


Coast to Coast - IRS Help

IRS Tax Relief - Tax Settlement

What Is IRS Debt Forgiveness Program?

The IRS has expanded the Fresh Start Program, which makes it easier to afford your tax payments with IRS debt forgiveness. The IRS understands in life "stuff" happens. That’s why the agency offers several IRS debt forgiveness options when you can’t afford to pay your tax debt.

Under different circumstances, taxpayers can have their tax debt partially forgiven (the IRS never takes zero dollars). When the IRS considers forgiving your tax liability, they look at your present financial condition first. This means the IRS can’t collect more than you can reasonably pay. If any collection action would force you into a financial crisis where you lose all sense of financial security, the IRS can’t collect the back taxes.

Look for IRS Collection Actions

If you can’t pay but you haven’t reached out to the IRS for forgiveness or assistance, you should still expect them to begin taking collection actions against you. These enforcement actions can range from seemingly benign, like loads of notices in the mail, to very aggressive, like private debt collection agencies getting involved and tracking you down. You could also find that your passport is at risk due to tax debt.

Some of the IRS’s often-used collection actions include:

Tax Lien - Federal Tax Lien

A tax lien is the government’s claim against your property, which will secure their interest in your assets if you fail to pay your tax debt. Think of a federal tax lien as a passive collection. Unlike a levy, a lien doesn’t mean your property will be taken immediately. However, you’ll still need to address the tax lien. Not only can a tax lien keep you from selling your property, but it can also snowball into a more aggressive collection action in the future.

Tax Levy - IRS Bank Levy

A tax levy is the government’s legal seizure of your property to satisfy your outstanding unpaid tax debt. You should receive a notice of levy from the IRS, which will let you know that they are planning to pursue seizure actions against you.

A Tax Levy can be placed on personal property like your home, car, or boat. They can also be placed on your assets, like your bank funds, tax refunds, and wages. Should the IRS go after your bank account, you will have 21 days to get your money back. Needless to say, you have little time to lose.

IRS Levy - Wage Garnishment

An IRS Garnishment (wage garnishment) is a type of tax levy in which the IRS will take part or all of your income in order to settle your existing tax debt. An IRS garnishment on your wages is continuous and will seize your money until it is stopped and released. The agency will do this through your employer and will continue garnishing your wages until your tax debt is paid or other arrangements are made to pay your tax debt.

Pay Less Than You Owe with Offer in Compromise

Know this: The IRS wants to accomplish 2 things. The agency wants to collect money and close a case/file. Even if the IRS collects $100 or $500 on a tax debt, they show this as a collection and is no longer "open money." You can apply for the IRS government settlement plan called an Offer in Compromise (OIC) to resolve the remaining tax debt. You do not have to be destitute to be eligible and qualified to settle with the IRS.

Depending on your financial capacity and upon acceptance, the IRS significantly reduces the total debt that you can pay. This reduced amount can be paid in a lump sum or in fixed monthly payments.

There is a financial formula with the Offer in Compromise program though. It isn’t always easy to qualify for an OIC. The IRS considers your ability to pay, income, expenses, and asset equity when determining your eligibility for an OIC. While it can be a life-changing tax resolution for many people, the IRS doesn’t give an Offer in Compromise easily.

Here are some common reasons for ineligibility:

1. You haven’t filed all required tax returns

2. You haven’t made any required estimated tax payments

3. You’re currently in an open bankruptcy proceeding

4. You own a business with employees and haven’t submitted all required tax deposits

4. You could pay your tax debt in a lump sum or through an installment agreement and/or equity in assets.

But don’t let any catches deter you from seeking tax debt help. If you’re concerned you may not qualify for an OIC, consult a tax professional to see what IRS forgiveness options might be available to you.




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