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How to Have Your IRS Tax Debt Forgiven

March 21, 2024 Uncategorized


How to Have Your IRS Tax Debt Forgiven

Owing money to the IRS can be super stressful. The letters start coming in, the threatening phone calls happen, and before you know it there’s a lien on your house! What do you do? Don’t panic – there are options for getting your IRS tax debt forgiven. This article will walk you through everything you need to know.

What is IRS Tax Debt Forgiveness?

IRS tax debt forgiveness is when the IRS agrees to let you pay less than the full amount you owe in taxes, penalties, and interest. There are a few different programs the IRS offers to help taxpayers who can’t pay their full tax debt:

  • Currently Not Collectible – The IRS temporarily stops trying to collect from you if you can prove you’re in financial hardship
  • Installment Agreement – The IRS lets you pay your debt off over 6 years
  • Offer in Compromise – You offer the IRS less than you owe, which they may accept
  • Innocent Spouse Relief – Relief for taxpayers whose spouse caused the tax debt

The IRS won’t just forgive your tax debt out of nowhere. You have to qualify for one of the above programs first. The IRS will look at your income, assets, expenses, and ability to pay before deciding if you’re eligible.

Do I Qualify for Tax Debt Forgiveness?

Here are some of the main factors the IRS looks at to determine if you qualify for tax debt forgiveness:

  • Your total tax debt – Generally under $50,000
  • Your income – Below $100,000 for individuals, $200,000 for married couples
  • Your expenses – The IRS looks at your necessary living expenses
  • Your assets – The IRS will total up the value of what you own
  • Your ability to pay – Based on your income and assets vs expenses

The IRS really wants to see that you don’t have enough income or assets left over, after paying necessary expenses, to pay your tax debt in full. That’s how they determine if you qualify for one of the tax debt relief programs.

How to Apply for IRS Tax Debt Forgiveness

If you think you may qualify for tax debt forgiveness, here are the steps to take:

Christine Twomey
Christine Twomey
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
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Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
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Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
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I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
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Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
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divesh patel
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I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.
  1. Gather your financial documents – Income statements, bank statements, bills, etc.
  2. Calculate your total assets and expenses
  3. Determine which tax relief program you qualify for
  4. Fill out the paperwork – IRS Form 656 for Offer in Compromise, etc
  5. Submit your application to the IRS
  6. Wait for a response! This can take 6+ months

It’s really important to take your time gathering documents and filling out the forms correctly. The IRS will reject incomplete or inaccurate applications. Consider hiring a tax professional to help you through the process if you’re unsure.

Offer in Compromise Explained

The Offer in Compromise (OIC) program is one of the best ways to get your IRS tax debt forgiven. Here’s a quick overview of how it works:

  • You fill out IRS Form 656 offering the IRS less than you owe
  • The offer should reflect what you can afford to pay based on your assets, income, and expenses
  • The IRS usually accepts more favorable offers – 20% of what you owe or less
  • The IRS will negotiate back and forth until an offer is accepted
  • Once accepted, your tax debt is forgiven after you finish the payments!

The OIC program can get rid of your tax debt for pennies on the dollar if you qualify. It’s always worth applying even if you think your offer may get rejected at first.

What Happens After Getting Tax Debt Forgiveness?

Once the IRS accepts your offer or compromise, you’ll have to follow through and complete the agreed payments. As long as you do, the remaining tax debt will be forgiven. Here are some things to be aware of:

  • Forgiven debt may be considered taxable income in the future
  • Your credit score will likely drop from the forgiven debt
  • The IRS can reinstate your original debt if you default on the offer
  • Get professional help managing any future tax issues

Even with these potential drawbacks, getting your tax debt forgiven by the IRS is still much better than continuing to owe money you can’t pay back! Just make sure you consult tax professionals to help you navigate any complications.

Common Mistakes to Avoid

It’s easy to sabotage your own tax debt forgiveness application by making some common mistakes. Here are some tips:

  • Be 100% truthful on all forms – lying gets you rejected automatically
  • Don’t try hiding assets or income from the IRS
  • Calculate your expenses accurately – both living expenses and allowable deductions
  • Triple check your offer amount – lowball offers get rejected
  • Respond promptly to any IRS requests for more information

Basically, you want to be cooperative, transparent, and proactive throughout the tax debt forgiveness process. The IRS will look for any reason to reject applications, so don’t give them one!

Other IRS Tax Relief Programs

If you don’t qualify for the Offer in Compromise program, don’t lose hope! The IRS has some other tax relief options:

  • Currently Not Collectible – The IRS temporarily stops collection efforts[1]
  • Installment Agreement – Pay your tax debt off slowly over 6 years[2]
  • Penalty Abatement – Get failure-to-file or failure-to-pay penalties removed[3]

Look into whether you qualify for any of these tax relief programs as well. They can provide more time to pay your IRS tax debt or reduce the amounts owed.

Use a Tax Professional

Navigating IRS tax debt forgiveness is confusing AF. All the forms, waiting periods, negotiations – it’s a lot. Do yourself a favor and let a tax pro handle it for you.

A tax attorney, CPA, enrolled agent or tax relief firm has experience getting IRS tax debt reduced or eliminated. They know all the insider tricks for getting offers accepted. Their fees aren’t cheap but they almost always pay for themselves through the savings.

Plus, you avoid the stress of figuring everything out yourself. Let the tax pros handle the IRS so you can focus on more important stuff.

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