So, how is the IRS ever going to collect on all of those back tax debts? They won't. Not only that, but they can't. With limited resources, a criminally understaffed employee-base, and a huge number of struggling taxpayers with accrued tax debts, there's simply no way the IRS can keep up. Because the IRS is unable to collect on all of those back taxes, IRS forgiveness programs were instituted.
Three IRS Forgiveness factors that are in your favor:
#1) Statute of Limitations on collections: Did you know, under most circumstances, that there is a clock running on the IRS's ability to collect back taxes from you? After the necessary time has passed, your tax debt is removed.
There are definitely situations where it would be more prudent to not enter into any deals with the IRS. After all, if your circumstances call for it, it's possible you won't have to pay back anything. If you'd like to learn when your tax debt expires without raising any red flags, click here to learn about our service that can tell you exactly what you owe and when your tax debt expires.
#2) "You Can't Get Blood From A Stone": There is no difference in how much you owe if you don't have the money to cover your debts. It's called "reasonable collection potential" (RCP). If you have a small income - meaning you have absolutely no assets - your "reasonable collection potential" is $0. The IRS will never accept $0 dollars but they will accept $100 to settle a tax debt.
IRS Forgiveness Programs:
IRS Forgiveness - Currently Non-Collectable Status
If your Reasonable Collection Potential is low and the assets you have aren't worth anything or are inaccessible, you may be able to qualify to be placed into Currently not Collectible status. Being Currently not Collectible means that you don't have to make any payments to the IRS, aside from your current withholdings or estimated tax payments. Being Currently not Collectible keeps the clock running (Statute of Limitations), so if you are to remain in Currently not Collectible for the duration of the statute of limitations, it's quite plausible that you won't have to pay the IRS anything.
IRS Forgiveness - Partial Payment Installment Agreement
A Partial Payment Installment Agreement is what you may qualify for if you have too much of a Reasonable Collection Potential to be Currently not Collectible (in other words, when your income and assets are too high to reasonably land you in non-collectible status). A partial payment installment agreement means that instead of not having to pay anything to the IRS, you will need to pay them something each month. Much like a mortgage or a car loan, you're working on reducing your owed debt.
When entered into a Partial Payment Installment Agreement, the same benefits apply as being Currently not Collectible -- you are running down the collections clock and may get closer to having the collection period expire and eliminate your tax debt entirely.
If the amount you are paying does pay off the debt within the remaining collection period, that would likely be a regular installment agreement, not a PPIA. But make no mistake about it, negotiating an installment agreement may not be all that easy -- the IRS much prefers to get its money sooner rather than later. It's important to only enter into an installment agreement or PPIA that you know you can handle. Many taxpayers fall into the trap of being intimidated into a repayment schedule that they simply can't afford.
IRS Forgiveness - Offer in Compromise -- Doubt as to Collectability
There are a number of Offer in Compromise options available with the IRS, but they each tend to be different beasts. The one the IRS Tax Relief team at Flat Fee Tax Service, Inc. would like to focus on is a specific type of offer -- doubt as to collectability -- the most common type of IRS forgiveness program we use to settle our clients' tax debts for far less than what is owed.
The IRS isn't being generous. The IRS Forgiveness option through the Offer in Compromise program is a financial formula.
The IRS doesn't forgive debts out of kindness or generosity. The IRS will forgive tax debts because the reached resolution is in their best interest. The key is to align yourself with the government's best interests, but only when the outcome also works in your favor. Much like the necessity of understanding the importance of the word "compromise" in an offer in compromise, you have to be willing to meet the government partway.
FLAT FEE TAX SERVICE, INC HAS A 95% IRS FORGIVENESS SUCCESS RATE
PER 2016 IRS STATISTICS - THE IRS APPROVED 42% OF THE IRS FORGIVESS APPLICATIONS
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