If you owe the IRS and can’t pay, you may qualify for the IRS Tax Forgiveness Program.
Under certain circumstances, taxpayers can have tax forgiveness for their tax debt. When the IRS considers tax forgiveness, the present financial condition of the taxpayer is the primary reason for settlement. That means the IRS cannot collect more than a taxpayer can pay. If any enforcement action by the IRS would force a taxpayer into a financial crisis, the IRS cannot collect the back taxes.
Tax Forgiveness - Offer in Compromise
If a taxpayer only has the financial resources to pay only a partial amount of their tax debt can apply for the IRS tax forgiveness plan called an Offer in Compromise to resolve the remaining tax debt. Depending on the financial capacity of the taxpayer, the IRS significantly reduces the total tax debt to an amount that the taxpayer can pay. This reduced amount can be paid in a lump sum or in fixed monthly installments.
Tax Forgiveness - The Fresh Start Initiative
To make it easier for taxpayers to qualify for an Offer in Compromise, the IRS has expanded tax forgiveness through the Fresh Start Initiative. Under the new, more flexible rules, taxpayers do not have to disclose extensive financial details to the IRS to judge their paying ability.
The Fresh Start Initiative for an Offer in Compromise offers taxpayers the following advantages:
1. The IRS now looks at only one year of future income for offers if they are paid in five or fewer months when calculating a taxpayer’s reasonable collection potential. This is down from previous four years. For agreements of six to 24 months, the IRS now looks at two years of future income instead of the previous five years.
2. Taxpayers are now allowed to make their student loans’ minimum payments for post-high school education loans guaranteed by the federal government.
3. Taxpayers may, under certain conditions, pay delinquent federal and state or local taxes in monthly installments if they cannot pay it in full.
4. The standard allowance for the Allowable Living Expense amount has been expanded. This allowance now includes credit card payments, bank fees and charges, and other miscellaneous allowances.
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CURRENT IRS STATISTICS FOR 2016 HAVE 42%
OFFER IN COMPROMISE APPROVAL RATE.
95% OF FLAT FEE TAX SERVICE, INC'S CLIENTS HAVE BEEN APPROVED FOR TAX FORGIVENESS.
The Offer in Compromise is much publicized because it allows taxpayers to reduce their tax debt. While this certainly sounds attractive, it’s important to remember that an Offer in Compromise is not for everyone and there are strict qualification requirements. Those taxpayers who have limited financial ability and meet certain tax forgiveness qualifications may seek reduction through an Offer in Compromise.
The IRS reviews the financial status of every applicant, including income from all sources and asset equity before accepting the application for an Offer in Compromise. Expenses and ability to pay are also considered. If it’s discovered that a tax forgiveness applicant has the ability to pay the entire tax debt, the IRS may penalize him or her for requesting tax debt reduction. This is a big reason why you should have an experienced IRS Tax Lawyer do your Offer in Compromise.
If the IRS determines that forcing the taxpayer to pay the full debt will create a financial crisis, the IRS may consider reducing the debt to a figure that the individual can pay in a lump sum or in installments. According to the IRS, a financial crisis is one in which the taxpayer cannot satisfy basic living needs such as shelter, food, transportation, etc.
If you qualify for tax forgiveness through an Offer in Compromise, it will drastically reduce your tax debt. In order to determine whether an Offer in Compromise is your best option for tax forgiveness, you may want to contact Flat Fee Tax Service, Inc.
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