What is a One Time Forgiveness and does the IRS offer it to everyone?


One Time Forgiveness

With more than a million people owing money to the IRS at any given moment and the limited resources and workforce that the IRS has, the IRS does have the self-awareness that they cannot collect every penny every tax debtor has owed. However, the IRS does intend to collect every penny it can collect. 

For the IRS to cover the cases that some people cannot collect the tax debt, there are one-time forgiveness programs that provide some help to not only the tax debtor but also the IRS to collect the most money out of every person that owes a debt. However, there is no straight answer to forgiveness programs that the IRS offers universally to everyone and organization that owes any tax debt. There are many twists indirect routes to get there.

One of the first programs is a statute of limitation that the IRS has, which is that the IRS cannot collect any unpaid taxes and debts that they did not collect that older than ten years from the year that the tax was assessed. So any taxes and debt owed for less than ten years, the IRS has the legal rights to attempt to collect from you. However, when the same debt passes the ten-year mark, it will be automatically disqualified from being collected by the IRS.

Most people cannot avoid the debt for longer than ten years, or in those unique situations, the IRS allows you to have debt remain unpaid for more than ten years. This is when the IRS will forgive debts that have a low Realistic Collection Potential (RCP), which is characterized bt the following criteria:

  • You have a low-income level.
  • There is no practical method for you to collect or earn enough money to pay for the debt.
  • Your assets cannot pay for your debt.

As long as one of these criteria is met, you will be likely marked with a low RCP status, which then the IRS will not make any challenging attempt to get you to pay for the debt. However, it does not mean that the debt is wiped.

The IRS is also likely to mark your status with a Non-Collectible status in certain situations. However, like the RCP, it does not mean the debt is wiped but delayed. The Non-Collectible status means you do not have money or asset to pay for what you owe, but the IRS will give you time and wait to collect until after you have earned a higher income or amount of asset. We have to remember that if the IRS waits for more than ten years, the debt is then wiped.

There is also the IRS Fresh Start Program, which allows you to pay off your tax debt in a few ways:

  • Offer in Compromise (OIC) requires to you proof that you cannot pay off the full amount or it is not your responsibility for this debt; the IRS will settle with you to lower the debt amount
  • Partial Payment Installment Agreement (PPIA), which is commonly used to pay for debt over time until it is fully paid off or after ten years.
  • Tax Lien, which you have to pay off your entire debt but without the IRS reporting your debt to any credit agencies, in exchange that you must have a tax lien withdrawn from your account.

If circumstances allow, an Offer in Compromise is the best option as it reduces the total amount of debt you have to pay, but it does have stricter requirements for the application process. At Republic Tax Relief, our specialists and attorneys may help you negotiate with the IRS to maximize the possible reduction in fees and the debt you might have to pay with our proven methods in dealing with the IRS. Call us at (951) 707-4440 for consultations today.