There are countless Americans out there who owe back taxes on personal income to the Internal Revenue Service (IRS). Are you one of them? Do you wish if there was a way to circumvent these back taxes? If yes, then you are in luck!

When figuring out how to get back taxes forgiven, you must be absolutely, a hundred percent clear on one thing: the IRS is a stringent and powerful tax collection agency which is not very keen on protecting the tax payers. So, does it mean that there is no way to escape back taxes from this authoritative organization? In order to effectively tackle this serious concern which has stolen the peace and sleep of numerous Americans like you, read on to know what back taxes are and how to get back taxes forgiven.

If you need any kind of tax help, please call us at 407-502-2400 or email us at [email protected].

What Are “Back Taxes”?

Before moving on to how to get back taxes forgiven, it is essential to understand what back taxes are. All those taxes that were not paid in their payable years are called back taxes. The levels on which an individual can have unpaid back taxes are:

  • Local
  • Federal
  • State

An important thing to know here is that back taxes continuously keep on accumulating penalties and interests upon them at regular intervals which is quite a disconcerting issue. So it is quite understandable that people having back taxes want to know how to get back taxes forgiven. So let’s get down to business and understand the mechanics of the whole process before we discuss ways for how to get back taxes forgiven.

What Exerts Pressure on the IRS to Forgive Back Taxes?

There is a long enough time duration during which the IRS can collect the back taxes from you. This means that the problem will never leave you in peace and won’t allow you to lay low for long. There is a fixed interest rate that will be added to the back taxes each month. So it is a frightening problem – having to return back taxes. But the fact that you are not the only American facing this issue should lend some comfort. There are probably a million other people who too want a way out and are worrying day and night for how to get back taxes forgiven.

Let’s just simplify the entire ordeal for you. Hypothetically, just assume that you are broke and do not have enough assets or money which will pay off all your back taxes and debts. In such a scenario, strictly speaking in technical jargon, the IRS will determine the “Reasonable Collection Potential” (RCP) of an individual. Any amount that is either equal to or more than the RCP shall be acceptable for the IRS. Something is better than nothing, right? That’s how IRS sees it too.

There are also difficult, yet possible scenarios in which an individual can even file for bankruptcy which shall eliminate all previous tax debts (but it is not something that IRS will be looking forward to). So does it make it a good deal for the IRS to settle for something lower than the actual amount? Well, most certainly, the answer to this question is yes. So the IRS also exerts pressure to introduce back tax forgiveness programs. So to all those people who are wondering how to get back taxes forgiven – you will want to read this.

If you need any kind of tax help, please call us at 407-502-2400 or email us at [email protected].

File the Delinquent Tax Returns

If you have unpaid taxes, you are not just liable to pay enormous sums of interests and penalties; your assets are also under threat if you don’t pay off your debt. This is a troublesome detail for all those who have sky-rocketing back taxes and are figuring out how to get back taxes forgiven. The underlying problem with this situation is that now the IRS is not bound to negotiate with the delinquent taxpayer and reach a settlement. The IRS will eventually have the authority to seize:

  • Your social security number
  • Paycheck
  • Bank accounts
  • Car
  • All sorts of valuable assets

So if you were wondering how to get back taxes forgiven, you must file the delinquent tax returns and the unfiled tax returns. By doing this, you could reverse the shocking penalties and will become eligible for tax “forgiveness” or reduction programs.

The IRS Back Tax Forgiveness Programs

If you are someone interested in knowing how to get back taxes forgiven, bear in mind that the IRS will never completely forgive the back taxes. Your back taxes can, however, be minimized and settled by acting upon several other methods. So how to get back taxes forgiven if the IRS does not believe in the royal pardon? There are certain programs through which a taxpayer can have the back taxes “reduced” which can be used synonymously with “forgiven” in this context. In order to know which back tax forgiveness program best fulfills your requirements, have a look below at the various tax forgiveness programs that are available.

1.    Penalty Abatement

If you are interested in knowing how to get back taxes forgiven, then Penalty Abatement is one of those methods. A reasonable cause will determine whether the IRS will adjust the interest and penalties assessed to the back taxes of the taxpayer. So the taxpayer will have to petition a justifiable genuine cause when filing for the abatement of penalty. The following rationales justify as a reasonable cause:

  • Being Jobless
  • Decline in the income
  • Serious health troubles
  • Invincible forces of nature
  • Death of a close family member
  • Divorce
  • Poor tax advice
  • Delay or error by the IRS
  • Erroneous written advice given by the IRS

All those people who are looking forward to know how to get back taxes forgiven, and are willing to get facilitated by the penalty abatement, must know that they will only get a single chance to petition. Yes, the one and only. So what does that mean? It means that you will have to be pretty good with your solitary attempt so that you are not denied. Inexperienced taxpayers are bound to fail so it is imperative that you acquire the services of a qualified and experienced IRS tax preparer or professional to assist you with the petition of Penalty Abatement.

How to File for Penalty Abatement?

You can use either one of the following methods to file for penalty abatement:

  1. Over the telephone or in a meeting
  2. Filing a petition
  3. Submitting Form 843 with a petition

For detailed instructions for Form 843, visit this website.

2.    Currently Non-Collectable Status

If you are deliberating on how to get back taxes forgiven, then depicting a non collectable status can also assist you in this regard. If you fulfill some or all of the conditions specified below, you might just qualify to attain the non collectable status:

  • You have an extremely low reasonable collection potential
  • Your assets are not worthy enough
  • Your assets are inaccessible
  • You are unemployed with no source of other income
  • Your only way of earning is through the benefits yielded from social security and welfare
  • You have little money remaining after the payment of rent, groceries and other utilities

But what does this mean and how does it get back taxes forgiven? You see, if you justify your reasons well enough, you will not have to make any additional payments to the IRS apart from the estimated tax payments or current withholdings, that is, no past taxes are due. The main advantage of currently non collectable status is that the IRS will not levy your bank account, will not compel the individual to enter into an installment agreement or withhold your wages. If your status remains currently non collectable for the duration of the statute of limitations, it is possible that you will not have to pay anything to the IRS at the end and your back taxes are forgiven.

When will the currently non collectable status end?

The time duration varies from one person to another. The status is directly proportional to the monthly income earned by the individual. If a person qualifies the currently non collectable status, the IRS agent inserts a closing code in the account of the taxpayer. The code will determine when the files of the tax payer will have to be reviewed again. If you start earning sufficient income after some years, then you will have to start paying the back taxes. The currently non collectable program is particularly helpful because it allows the taxpayers to stand on their feet until they overcome their financial hardships.

So if you are really curious about knowing how to get back taxes forgiven, learning more about currently non collectable status will prove to be considerably helpful.

How to file for currently non collectable?

All those people who want to know how to get back taxes forgiven and are considering the option of currently non collectable status, they will have to gather the necessary documents:

  • Bank statements for the last three months
  • Proper listing of the assets with the market value
  • Mention their living expenses and income
  • Evidence of any self managed medical payments

After this you will have to fill in the Form 433-A or Form 433-F. Review the form by consulting the IRS manual for financial analysis to understand the nuances for assistance.

3.    Partial Payment Installment Agreement

One of the reasons why people wanting to learn how to get back taxes forgiven should consider installment payment is that it will keep the IRS off your backs. It projects a positive image and depicts your willingness to cooperate and prevent the IRS from taking further action against you. You qualify for a partial installment agreement when your reasonable collection point is greater than what will qualify you for a currently non collectable status. This means that you will have to pay some amount each month to the IRS rather than not paying anything at all. So how does this benefit you? Well, you will not have the entire back tax forgiven but what this will do is that it will appease the IRS into accepting lesser amounts till the remaining duration of the collection period. Like the currently non collectable, the partial payment installment will give you time to reach a stage where you can file a bankruptcy, or surpass the collection time period which may help in getting the back taxes forgiven entirely. But the disadvantage with this method is that your interests will keep accruing. However, all those people interested in finding out how to get back taxes forgiven must know that negotiating the installments is difficult because the IRS will try to get as much as possible from you. You can discover more about the partial payment installment by visiting the IRS website.

4.    The Fresh Start Initiative: Offer in Compromise

What is Offer in Compromise?

To all those taxpayers who cannot pay their debts and want to know how to get back taxes forgiven, the fresh start initiative program will bring some relief. Taxpayers qualifying the criteria are allowed to make an “offer in compromise”. Through this offer, if you have unpaid taxes, you can pay lesser amount than what you actually owe. The IRS partially forgives the debt considering the existing financial condition of the taxpayer. Basically, the IRS cannot really collect more than the paying ability of the taxpayer. This is particularly great news for those who want to know how to get back taxes forgiven because the collection action of the IRS cannot force the taxpayer in financial crisis.

This particular offer in compromise initiative gives the taxpayers a substantial chance to start over and begin with a clean slate by paying substantial back taxes. This initiative is helpful to the IRS in a way that it will allow the taxpayer to stay current on the payable taxes in the future.

So if you are interested in finding out how to get back taxes forgiven, you must know that there are three ground rules on which the Offer in Compromise rule is based upon as mentioned below.

Basis of Offer in Compromise

  1. Effective Tax Administration

Through this, a compromise can be struck based upon the “effective tax administration”. This clarifies that:

  • There is no uncertainty related to the fact that the tax is owed
  • All the payable delinquent taxes can be collected from the individual

However, after paying the taxes, you will suffer from an economical “hardship”. In such a situation, the IRS may reach a settlement. Please note that this is granted only is special circumstances which means that the most likely candidates who can avail this are an “elderly couple” having an accommodation with an equity and limited income.

  1. Uncertain Liability

All those interested to know how to get back taxes forgiven should know that this one is granted in extremely rare circumstances; so be careful in attempting to have a go at this one. Uncertain liability or doubt as to liability basically means that the taxpayer will have to justify that the IRS has made some sort of a mistake. Any compromise reaches only when the there exists a genuine “dispute” related to the accurate amount of tax.

  1. Uncertain Collectability

As per uncertain collectability, the IRS believes that there is an uncertainty revolving around the total payable amount. That is, it’s doubtful that total payable amount is actually collectable from the taxpayer while remaining within the “Statute of Limitations”. Such cases arise when the overall income and assets of the taxpayer are less as compared to the amount of tax liability. But since the taxpayer has the ability to pay back something, the amount payable is negotiated and does not have to be paid collectively in a lump sum but can be returned in a series of monthly installments. Taxpayers interested in knowing how to get back taxes forgiven can consider this option.

What Is Expected From A Taxpayer Who Qualifies The Offer In Compromise?

If you want to know how to get back taxes forgiven and are looking forward to avail the offer in the compromise program, you must know that the following things are expected if one qualifies for the fresh start initiative:

  • The tax returns have to be filed on time for the next five years. Failure to comply will invoke the original taxes as well as additional interest and penalties.
  • The taxpayer will also have to pay any other tax which is due when the filing is done. Inability to do so will reinstate the prior back tax with interest and penalty.
  • The settled monthly installment that was accepted in the offer has to be paid punctually. Otherwise, same fate will transpire as explained in the previous two situations.

How to submit for Offer in Compromise?

If you were wondering how get back taxes forgiven and considering an offer in compromise, then you will have to complete Form 656 and attach the fees to the form. You may even get an exemption from the fee if your monthly income lies below the poverty line. For this, you will also have to submit an “application fee worksheet” available in the booklet of Form 656. You will also have to provide complete financial details by filling Form 433-A if you are an individual and by filling Form 433-B for businesses. In certain circumstances, the IRS may ask for a “collection information statement” in which you will have to convey your spouse’s information even if the back taxes are owed by the taxpayer alone.

If you need any kind of tax help, please call us at 407-502-2400 or email us at [email protected].

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