IRS Debt Forgiveness
If you owe money to the IRS, that debt can hang over you and cause many sleepless nights.. IRS debt forgiveness, however, may be possible.
The IRS has a well kept secret: It can forgive the tax
debt that you cannot pay. If the IRS realizes that you are not able to
pay, it will often move on to the next target. Of course, the hard part
is getting them to realize that you are not able to pay.
Offer-in-compromise is a method where in you pay cents for dollars of taxes owed. The IRS may be less eager to spend on securing bankruptcy and collecting a portion of the tax. Instead of assuming that filing for bankruptcy is the best solution when in dire straits, give a thought about offer-in-compromise.
In Publication 904, the IRS makes a provision for people in chapter 13 bankruptcy to avoid seizure, lien or levy if you can show them they stand to get more by your paying taxes in installments. The taxpayer is expected to pay monthly installments of tax for 60 months and beyond that, whatever amount remains is discharged. However, the taxpayer in question has to prove his ability to pay the fixed monthly installments.
Fresh start is another approach to acquiring IRS debt forgiveness. Under this approach, the IRS will waive all the taxes you owe. To obtain this status, you have to be in the ultimate financial nightmare. We are talking about dead broke and way upside down on debt. This approach is best undertaken with the help of a tax professional.
You would be surprised how often the IRS offers debt forgiveness. Sometimes the agency will let everything go, but more often it will settle for pennies on the dollar. The reason for this is the IRS has learned it can obtain more money from taxpayers by having them in the system versus continually hunting them. What a novel idea! If you have tax debt, consider talking with a professional about it.