IRS debt forgiveness program

What is the IRS Debt Forgiveness program and Fresh Start program?

IRS debt forgiveness programDo you have IRS tax debt that seems impossible to pay off?  If so, it is time to look into hiring a tax attorney to assist you with the payment options provided for in the IRS debt forgiveness program.  If you want to educate yourself before talking with a tax relief attorney, here is the rundown on some helpful information.

IRS debt forgiveness program qualifications

Under this program, the IRS collects only what a taxpayer can pay if trying to get debt forgiveness through an offer in compromise or partial pay installment agreement.  Through an offer in compromise or settlement of the tax debt for less than a taxpayer owes, the IRS focuses in on the present financial condition and of any dissipation of assets within the past three years.  If the disposable income and/or assets or potential dissipation of assets cannot pay off the debt in full, IRS debt forgiveness may be an option.  If a has occurred though, the offer may fail.

In order to qualify for debt forgiveness through an offer in compromise, a tax relief attorney will need to analyze your income and assets.  To qualify, the IRS must determine that the amount you offer to pay is the most it can expect to collect from you within a reasonable period. If the IRS believes you can pay the amount you owe in full, you will not qualify and your offer will fail.  You will then have the option to pay the full amount in a lump sum or through an installment agreement.

IRS debt forgiveness may also come with a partial pay installment agreement (“PPIA”).  When the IRS determines and agrees to a lower monthly payment plan amount where the debt is not fully paid off within the payment plan term, the remaining amount may be forgiven if your financial situation remains the same or worsens (contingent upon the collection statute expiring).  PPIA’s are harder to get than a regular payment plan and always require full financial disclosure to the IRS of your assets, income, debts and expenses.

Fresh Start Initiative makes it easier to qualify for debt forgiveness

Assisting with the IRS debt forgiveness initiative, is the IRS Fresh Start Program.  This program was created by the IRS in 2008 to help struggling taxpayers to help pay off and manage their tax debts.   The four main changes to IRS tax laws introduced by the Fresh Start Program, included:

  • Expansion of the Offer in Compromise Program offering more flexible terms
  • Higher Thresholds for Tax Liens
  • Introduction of Tax Penalty Relief
  • Easier Access to Installment Agreements

In 2012, a major expansion was implemented creating new provisions which included:

  • Expanding a streamlined Offer in Compromise program to cover more taxpayers. For example, the IRS introduced even more flexible terms with determining a taxpayer’s ability to pay.
  • Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
  • Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
  • Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.
  • Creating easier access to Installment Agreements for more struggling small businesses. For example, taxpayers can obtain longer repayment programs, making the monthly repayment more affordable.

Taxpayers needing tax help with IRS debt forgiveness should seek the advice of a tax attorney.  The San Diego Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (619) 639-3336. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

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