IRS Fresh Start Program New York
The IRS Fresh Start program is an excellent initiative for those taxpayers who have difficulty in clearing their tax debt in one payment. They can now conveniently do so by paying the amount in different pay periods over an extended period. The crucial aspects of the fresh start program have been discussed in this article. Some essential questions have also been brought up.
Can you get IRS debt forgiven?
You can get your debt forgiven by the IRS theoretically. The IRS understands life is not always easy, and sometimes people are not in a position to pay. However, the circumstances matter a lot for debt forgiveness. There are a lot of factors associated with debt forgiveness and proper research is required for the same. There are two types of debt forgiveness. The first one is forgiving debt less than the original amount. The second is forgiving the amount which is payable.
Your current financial status has a role to play. Offer in compromise (OIC) is a settlement you can make with the IRS. It can help you agree on an amount that is less than the initially owed amount. The amount is decided based on something known as the reasonable collection potential (RCP). The IRS does not settle for any amount which is less than the RCP. It is imperative to know extensively about the amount which you owe to the IRS to enter any kind of negotiation with them.
Is there one-time tax forgiveness?
Yes, one-time tax IRS debt forgiveness is a reality, provided you meet specific requirements. If you have an amount which is due for ten years, then the IRS can not collect this money from you. The IRS also does not seek to collect on a debt that is said to hold a low Realistic Collection Potential or RCP. Your account is low RCP if you have a low income, have no assets like real estate or any other liquid assets. If you are unable to make any payments to clear the due, then too, your RCP will be less.
There is another thing too which can exempt you from debts known as the non-collectible status. The status implies that you are currently not in a stance to pay back any debt. This offers you some time to earn some income or acquire assets any other way to pack your due amount.
Does the IRS forgive debt after 10 years?
The IRS has a maximum time limit of ten years to collect an unpaid debt. If it fails to do so, then the amount is written off, and any liability is automatically forgiven. This is known as the 10 Year Statute of Limitations. The date on which the ten years have been completed and the IRS has to write off your loans is known as the Collection Statute Expiration Date (CSED). As the CSED nears, the IRS opts for aggressive methods to collect the amount. They can act as your enemy and use confrontational methods or even act as a friend and offer various deals to pay back your loan. The IRS used all its legal and tactical methods to get you to clear your dues.
They also come out with new settlements and agreements. The IRS could even give you an offer for extending the CSED. But there is a catch. Sometimes, the period of ten years may continue for more than ten years according to the IRS. Differences arise between the debtor and the IRS over the CSED for many reasons. One of these reasons is if the person fails to pay the complete amount of taxes or pays them partially. The clock is paused for a variety of reasons, including filing for bankruptcy, filing an offer in compromise, filing a lawsuit against the IRS, and so on. A tax professional’s guidance can go a long way if you are interested in the 10-year statute of limitations.
How much will the IRS usually settle for?
In an offer in compromise, the Internal Revenue Service agrees on receiving payment less than the amount of the debt. The OIC is targeted towards people who have a very less chance of paying back their debt. OIC has been introduced to improve compliance rates. According to past settlements, the IRS, on average, settles for 6,629 USD in an offer in compromise. But it is not easy to agree on a settlement with the IRS. The OIC has a poor acceptance rate of forty percent. The IRS has its formula for calculating if you are fit for the OIC.
This depends on your monthly expenses, your employment status, your income, and other financial parameters. Suppose you are capable of paying the IRS within five months of settlement, then you will be granted a 24 months payment term by the IRS.
IRS debt forgiven