When you owe the Internal Revenue Service (IRS), you may wonder whether there is a way to avoid accumulating penalties and fines. Besides that, you may want to invest but fear that your tax lien will damage your financial credibility.
Luckily, the IRS offers a One Time Forgiveness program to help people deal with tax liability. Using this initiative, you can evade the negative consequences of owing taxes. You may also get enough time to organize your finances and repay the debt without causing significant financial problems.
Read on to discover several things you need to know about the One Time Forgiveness program. We will also explain how you can determine the most suitable tax relief program based on your needs and financial status.
How Many Options Does the One Time Forgiveness Program Have?
The IRS offers several options under the IRS One Time Forgiveness program. These include Innocent Spouse Relief, Installment Agreements, and Currently Not Collectible. Innocent Spouse Relief allows you to avoid paying penalties, taxes, and interests if your current or former spouse provided wrong information when filing back taxes.
For instance, if they did not disclose some of their income sources, which led to a penalty, you may apply for relief. This initiative is applicable if the IRS can only collect the amount due from the spouse. Besides that, you can only qualify if:
- The penalties are from self-employment taxes
- You can prove you did not know about the inaccuracy
- You and your spouse have not transferred money in a fraudulent scheme
Sometimes, your financial situation may make it very challenging to pay the taxes you owe. In such a case, you may apply for a Currently Not Collectible status. In case you qualify, the IRS will stop penalizing your debt and refrain from collection activities.
An Installment Agreement is a tax forgiveness program that allows you to repay your debts with a schedule. If you cannot remit the entire amount due to various issues and owe a debt of less than $50,000, you may benefit from the initiative.
Offer in Compromise (OIC) Tax Relief Option
OIC is a One Time Forgiveness relief program that is rarely offered compared to the other options. This initiative is an ideal choice if you can afford to repay some of your debt in a lump sum. Once you qualify, the IRS will forgive a significant portion of the total taxes and penalties due.
They will then provide a payment schedule allowing you to clear the remaining amount in installments. The payment period is usually a maximum of 72 months, whereby the IRS will require you to remit a specific figure without fail or delay for the entire period.
How Does One Time Forgiveness Work?
The One Time Forgiveness program you qualify for will mainly depend on your financial situation. However, determining the most suitable option may be challenging without professional help. It is advisable to consult with a tax resolution expert before applying for any relief program. By taking this step, you enhance the chances of qualifying and ensure you provide the IRS with correct information.
Once you apply for IRS One Time Forgiveness program, the IRS will assess your situation and evaluate eligibility. If they accept the application, they will provide a detailed repayment schedule.
Depending on the program you chose, you may send the amended debt in installments or lump sum. The IRS will also require you to remit all your taxes within the stipulated time moving forward. Other than that, they may perform periodic assessments on your financial status as needed.
Contact Tax Industry to Apply for Debt Relief
Each option in the IRS One Time Forgiveness program has several qualifications you must meet to be eligible. Unfortunately, gathering all the details you need to apply for this initiative may be frustrating if you do not have extensive knowledge about taxation.
At Tax Industry, we offer professional tax resolution services to help you deal with debt. Our experts can assess your situation to help you apply for the most suitable One Time Forgiveness option. Reach out to us today for reliable tax debt relief services. Due to the complex US tax systems, you may still have some questions about liability and relief programs. At Tax Industry, we have a team of experts specialized in resolution services. With their help, you can debunk common tax myths and understand how to avoid getting into trouble with the IRS. They can also guide you in applying for relief programs to clear your debt and prevent consequences like wage garnishment. Reach out to us today to consult a tax expert.
Frequently Asked Questions About One Time Forgiveness Program
1. Does the IRS Have a Tax Forgiveness Program?
When owing the IRS, you are likely to wonder if it offers a tax forgiveness program. The short answer is yes, but it is important to note that having a debt is not a guarantee that you qualify for forgiveness. Before requesting tax relief, you should understand the options available. This way, you can determine which one you qualify for and know how to apply. The tax forgiveness programs offered by the IRS are an offer in compromise (OIC), innocent spouse relief, currently not collectible (CNC), and installment agreements. Each of these categories has specific requirements for eligibility. Consulting a tax professional is the best way to check if you qualify and increase the chances of the IRS considering your application.
2. When Can You Use IRS One Time Forgiveness?
If you cannot pay tax penalties due to circumstances beyond your control, you might qualify for IRS one-time forgiveness. One type of this debt relief program is a reasonable cause, available to those unable to meet their obligations due to health issues or an act of God like floods or fires. First-time penalty abatement is another one-time forgiveness program that allows the IRS to waive all fines and penalties you owe. The qualification requirements are:
- No tax debts for the last three years
- Filing all returns in time
- Making prior arrangements to pay outstanding taxes
The final type of one-time forgiveness is a statutory exception. This relief program only applies if the IRS sends you an incorrect invoice after a tax debt caused by advice provided by their officials.
3. How Much Does the IRS Usually Settle For?
The value the IRS settles for will depend on the amount of debt. It also varies according to the type of tax relief program you use for repayment. For instance, if you select and qualify for an offer in compromise, you first need to pay a lump sum equal to 20% of your debt.
On the other hand, after an installment agreement, the IRS will ask how much you can afford to pay each month. They may also request you to remit a specific amount monthly by dividing
4 . How Do I Ask for Forgiveness From the IRS?
When planning to settle your tax debt, you can call the IRS to talk to their personnel. Another option is to mail them a tax relief program application alongside the needed supporting documents. Since you must prove eligibility when requesting IRS one time tax forgiveness, it is always advisable to get professional help. With the guidance of a liability expert, you can file all past returns and submit the proper documents. Besides, it will be easier to negotiate favorable repayment terms.
5. Does IRS Forgive Debt After 10 Years?
The IRS can forgive debts that exceed ten years under certain circumstances. However, it is important to note that you may not qualify if you keep failing to pay your debt for subsequent years. This forgiveness duration can also be longer if you sign agreements and waivers that allow the IRS to extend it.
- FinishLine Tax Solutions is a full-service, fully accredited tax resolution firm in Houston, TX, assisting companies and individuals nationwide in resolving tax problems with the IRS. We specialize in areas of back taxes such as IRS wage garnishments, IRS bank levies, and unfiled tax returns. Our team of experts comprised of licensed Enrolled Agents, CPAs, & IRS Tax Attorneys can assist you with IRS Audit Representation and Tax Planning. We are one of the leading tax resolution firms in the nation and your go-to tax relief firm that can take you to the Finish Line. Call us today to learn more about our tax relief process and tax resolution services.