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Tax Forgiveness: What You Need to Know

Oct 13

Tax Forgiveness: What You Need to Know

If you're struggling to pay your taxes, you may be wondering if there's such a thing as tax forgiveness. Unfortunately, there is no one-time tax forgiveness program in the United States. However, that doesn't mean that there aren't options available to help you if you're unable to pay your taxes. In this blog post, we'll explore some of the most common options for tax forgiveness and relief.

The IRS Fresh Start Program 


One option available to taxpayers who are struggling to pay their taxes is the IRS Fresh Start program. This program includes a number of different initiatives that make it easier for taxpayers to pay their taxes and avoid defaulting on their tax debt. Some of the key components of the IRS Fresh Start program include: 

- An increase in the dollar amount that triggers a federal tax lien 
- A reduction in the number of years that delinquent taxpayers have to repay their taxes 
- An expansion of the Installment Agreement program, which allows taxpayers to make monthly payments on their tax debt 
- New guidelines that make it easier for small businesses to obtain an Installment Agreement 
- Changes to the Offer in Compromise program that make it easier for taxpayers to settle their tax debt for less than they owe 
If you think you might be eligible for relief under the IRS Fresh Start program, you can find more information on the IRS website or speak with a tax professional. 

Penalty Abatement 

Another option for taxpayers who are struggling to pay their taxes is penalty abatement. Penalty abatement is a process by which the IRS agrees to waive or reduce certain penalties that have been assessed against a taxpayer. In order to qualify for penalty abatement, a taxpayer must typically demonstrate that he or she made a good-faith effort to comply with tax laws but was unable to do so due to circumstances beyond his or her control. If you think you might be eligible for penalty abatement, you can find more information on the IRS website or speak with a tax professional. 

Collection Due Process 

If you disagree with an IRS determination regarding your taxes, you have the right to request a Collection Due Process hearing. During this hearing, you will have an opportunity to present your case and argue why you believe the IRS determination is incorrect. 

If you prevail at your Collection Due Process hearing, the IRS may agree to waive or reduce certain penalties or interest charges that have been assessed against you. You can find more information about Collection Due Process hearings on the IRS website or by speaking with a tax professional.

While there is no one-time tax forgiveness program in the United States, there are several options available for taxpayers who are struggling to pay their taxes. If you're having difficulty paying your taxes, we encourage you to explore these options and speak with a tax professional who can help determine which option is right for you.

How Many Years Can You Not Pay Taxes?

The IRS has a 10-year statute of limitations on collecting back taxes. This means that the IRS can collect unpaid taxes from up to 10 years prior. However, this does not mean that you will not have to pay interest or penalties on your unpaid taxes. The IRS will still charge you interest on the unpaid amount, and you may also be fined up to 25% of the unpaid tax bill. If you are facing a tax bill that you cannot pay, it is important to contact the IRS as soon as possible to arrange a payment plan.

The 10-year statute of limitations is based on the date of your last tax return. If you have not filed a return in several years, the statute of limitations does not begin until you file your return. This is why it is important to always file your taxes, even if you cannot pay the full amount. 

If you owe back taxes, the IRS will first try to collect the amount through wage garnishment or bank levies. If these methods are unsuccessful, the IRS may then send your case to a collection agency. Once your case is with a collection agency, they will have up to 18 months to collect the debt. After 18 months, the debt will again be transferred back to the IRS. 

The best way to avoid owing back taxes is to always file your tax returns on time and pay as much of your tax bill as possible. If you do find yourself in a situation where you cannot pay your taxes, it is important to contact the IRS immediately to arrange a payment plan. The sooner you take action, the better your chances of minimizing interest and penalties.