Many Americans can fail to pay their taxes on time. There can be different reasons that restrict them to pay the taxes they owe. So, the government provides some financial relief to such people who are not in a condition to pay their taxes due for any reason. So, the IRS Tax and Debt Forgiveness Program supports people who are not able to pay their debt currently. It can help to reduce their debt or provide some relief through reducing their debt.
IRS Tax Forgiveness Plan can provide financial relief to people who are not in a situation to pay their debt but are willing to pay. The IRS takes care of their taxpayer and always tries to support them in different ways. IRS uses Offer in Compromise Program (OIC) and Current Non-Collectible status (CNC) to provide relief to taxpayers from paying debt. Both are IRS Debt Forgiveness Plans applied on different conditions.
IRS Tax and Debt Forgiveness Program
Every individual needs to pay their taxes on time otherwise they may own some debt on tax. Many taxpayers try to pay taxes but due to uncertainty, they may fail to pay their taxes. Debt Forgiveness IRS Plan can help people to get some relief on their tax debts. Taxpayers can use two different programs such as OIC and CNC. Many taxpayers may face high challenges in paying their taxes on time. It can result in server consequences and the resultant need to pay high taxes or their property can be garnished by order. To avoid such a situation, the government provides a Tax Debt Relief Program to provide some financial relief to eligible people.
Not paying taxes for longer can cause stressful situations. So, the IRS provides support to people who are willing to pay their taxes but are unfortunately unable to pay them. Therefore, the Tax Debt Relief Program can help people notify the IRS about their debt and ask them to get relief for a certain period. Everyone will not receive these benefits instead of eligible people.
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Tax and Debt IRS Forgiveness Program – Overview
| Article On | IRS Tax and Debt Forgiveness Program |
| Country | USA |
| Department | Internal Revenue Services |
| Beneficiary | Taxpayers |
| Amount | Tax and Debt amount |
| Category | Financial Assistance |
| Official Website | irs.gov |
Offer in Compromise (OIC) Program Eligibility
Every taxpayer is not eligible to get these benefits. OIC Debt Forgiveness Plan helps people in their debt to provide some relief. So, the IRS can accept different situations or circumstances in which you can be eligible to receive debt forgiveness.
- You have paid all your previous taxes.
- You are paying some part of your tax you owe but not full.
- You are not able to pay the full amount you owe in circumstances like income, ability to pay, asset equity, or expenses.
- You have paid enough amounts that the IRS can expect to collect in a certain period.
- You are not involved in any open bankruptcy.
- You possess a valid extension for the current year’s return.
- As an employer, you have paid your previous 2 quarters’ tax deposit including the current tax deposit before applying for the OIC Plan Benefits.
Current Non-Collectible (CNC) Status Eligibility
Any taxpayer can get this Tax and Debt Forgiveness Plan but is for those who are not able to pay their taxes currently. Some taxpayers due to any reason are not in a situation to pay their owed taxes currently and want some extension. Then this plan can help you to get this financial relief from paying your taxes for a while with the condition. IRS has set some condition that needs to be met to qualify for the Forgiveness of Tax and Debt through CNC Status.
- You do have not sufficient money to pay the tax you owe which makes you unable to pay your tax and debt. Moreover, you don’t have sufficient money in your bank account that can be used to pay your debt after paying for necessary expenses.
- In case, you are not able to pay the debt, then you need to provide information on average monthly income and necessary daily life expenses through documents. It can help in verifying if you can pay your debt in installments.
- You will need to file a financial statement or Form 433 that helps to prove your monthly income including monthly necessary expenses.
If you can submit these documents with the required information, then you can receive this CNC Status. However, there is always a chance that the IRS can limit the necessary expenses. This can prevent you from receiving this Forgiveness in Debt and Tax using CNC Status. For example, if you present your fuel expenses as $120, then the IRS can limit it to $40. Thus, limiting daily expenses can lower the chance of receiving this debt relief.
How to Claim Tax Forgiveness OIC Program?
Any individual who owes taxes more than $10,000 can contact tax professionals to fill out form 656. Some steps can help to claim the Tax Forgiveness Program.
- Fill the Form 433-A for individuals or 433-B for businesses including the required documentation that is asked in the forms.
- You must fill the Form 656(s) for individual and business tax debt using separate Form 656.
- Then you need to mail the above form to the application site provided in Form 656-B. You have to submit your application package to the IRS through designated sites.
How to Claim Tax Forgiveness CNC Plan?
Any individual who is looking to receive the Forgiveness in Debt and Tax can apply for the CNC Status. However, individuals need to submit some documents to be eligible for this financial relief.
- You need to fill the Form 433-A which includes the information for the statement of wage earners including self-employed individuals.
- You need to fill out IRS Form 433-F which includes information for the statement of individual earnings.
- You also need to fill the IRS Form 433-B which includes business statement and making any collection decision.
Updates on Forgiveness in Tax and Debt
- You can also fill the Form 1099-C to get relief of $600 on debt. It can happen only if any identifiable event has occurred or you are an applicable financial entity.
- If the IRS does not receive payment after the Forgiveness Tax and Debt before 10 years from the application date. In such a case, your debt will dissolve. It means your total debt will be zero.
Niamh Prescott has a degree in Mass Communication and an MBA in Finance. She has worked for two media houses and is now running her own media company.
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