IRS tax forgiveness questions to ask now
Hitting the submit button on your tax filings can result in a range of emotions, from the relief of getting things squared away to the stress of realizing you owe more than expected to the Internal Revenue Service (IRS). If you find yourself in the latter situation and are staring down a tax bill that you simply can't pay out of pocket, you may be wondering whether the IRS offers any form of tax forgiveness.
The good news? They do. The bad news? While the IRS' tax forgiveness programs can help taxpayers reduce or manage their tax debt, qualifying and applying for these options is typically a complex process.
Navigating the IRS' tax forgiveness programs typically requires an understanding of the eligibility criteria, repayment terms and potential alternatives — information that the average taxpayer may not know. So, to get a clear picture of where you stand and how to best navigate your tax debt, it's important to ask the right questions about the IRS tax forgiveness process.
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IRS tax forgiveness questions to ask now
Asking the IRS tax forgiveness questions outlined below could help you determine if relief is available for you and how you can take advantage of it.
What tax forgiveness programs does the IRS offer?
The IRS offers several programs designed to assist taxpayers who are struggling with their tax debt. The most well-known option is the Offer in Compromise (OIC), which allows taxpayers to settle their tax debt for less than the full amount owed. Other options include installment agreements and penalty abatement. Understanding these programs can help you determine which one best fits your financial situation.
Speak to a tax relief specialist about your options now.
Do I qualify for an Offer in Compromise?
An Offer in Compromise is one of the most sought-after forms of tax relief, as it can result in paying a fraction of what you owe to the IRS to settle your tax bill, but not everyone qualifies. The IRS considers your income, expenses, asset equity and ability to pay when evaluating your application. If you're experiencing financial hardship and cannot reasonably pay your full tax debt, this may be an option. However, the application process is rigorous, and the IRS typically rejects applications that don't meet their strict criteria.
Can I set up a payment plan instead?
If an Offer in Compromise is not an option, an installment agreement may be the next best option. The IRS allows taxpayers to pay off their debt over time through structured monthly payments. But before signing up for a payment plan, you should ask how much interest and penalties will accrue over time, whether you qualify for a short-term or long-term plan and whether an automatic bank withdrawal is required.
How does Currently Not Collectible status work?
If you are in extreme financial hardship and cannot afford to make payments at all, you may qualify for Currently Not Collectible (CNC) status. This status temporarily suspends IRS collection efforts, meaning they won't levy your bank accounts or garnish your wages. However, CNC status doesn't forgive or erase your tax debt — it simply defers it until your financial situation improves. So, you should ask how long CNC status lasts and what circumstances could trigger a reassessment.
Can I get my tax penalties forgiven?
Tax penalties can quickly add up, making your overall debt even harder to manage. The IRS does offer penalty abatement (meaning that the agency will forgive your tax penalties) in certain circumstances, though, such as first-time offenses or reasonable causes (like medical emergencies and natural disasters). If you're struggling due to penalties, ask whether you qualify for relief and what documentation is required to support your request.
Should I work with a tax relief specialist on tax forgiveness?
When dealing with the complexities that come with IRS tax forgiveness programs, you may wonder if professional help is worth the cost. Tax relief specialists understand the nuances of IRS procedures and can often navigate the system more efficiently than individual taxpayers, so for many people, they may be worth the extra money.
If you decide to work with a specialist, though, be sure to verify their credentials, ask about their success rate with cases similar to yours and get a clear understanding of their fee structure upfront. For simpler cases, you might handle the process yourself, but for complex situations involving substantial tax debt, professional guidance could potentially save you money.
The bottom line
Navigating IRS tax forgiveness programs typically requires asking the right questions — and you should do so early and often. While these programs can provide significant relief, they come with complex requirements and potential drawbacks. By asking these crucial questions now, though, you can make informed decisions about your tax situation and take meaningful steps toward financial stability.
