Tax time is an important time for many to collect documents and review expenses. If you end up owing money and you feel it is more than you can afford, there are options available to find a resolution and protect yourself without outside agencies. 

IRS Debt Forgiveness

Debt forgiveness is the Internal Revenue Service method of offering options to taxpayers who owe money but are unable to pay, or unable to pay all at once. Some of these options drastically reduce the amount of debt owed while others offer payment arrangement options to meet your needs but still fulfill your tax obligations and settle a debt. To best benefit from any of these options, it is best to work directly with the IRS rather than going through other agencies to protect your information, safeguard your identity, and avoid possible scams. 

What Is Debt Forgiveness Used for? 

The IRS debt forgiveness and debt relief options are intended to assist taxpayers during times of hardship to settle debts and resume their status as eligible taxpayers. The options seek to find a comfortable and manageable way for taxpayers to complete payments and maintain a quality life. 

Who Qualifies for Debt Forgiveness? 

To qualify for debt forgiveness, you need to be in good standing with the IRS and be willing to provide any requested documentation. The nearest form to debt forgiveness is called an "Offer in Compromise." An offer in compromise allows you to settle your obligation for pennies on the dollar and accruing any penalty fees. An important key to focus on is to quickly act before payments are due or fees begin to collect. There is a calculation tool available through the IRS website to help you determine your eligibility as well as a detailed booklet released by the IRS. 

This option, often the most desired, allows you to work with the IRS to settle your debt for less than you owe. You can do this by negotiating based on your ability to pay, by challenging the amount of actual debt, or by proving that paying the owed debt would place you in financial hardship in the future. 

Alternatives to Debt Forgiveness

IRS Forgiveness offered through tax agencies sound enticing, but full forgiveness and dissolving of your debt obligations is often not a reality. The IRS offers options to help you meet your obligations and maintain good standing while maintaining your quality of life and caring for your family and needs. Additionally, there are certain conditions that qualify you for assistance. If you are unemployed or underemployed, you can request to be listed under a specific status designated as "uncollectible." 

This delays any collection efforts and accrued interest as well as provides relief in the form of a type of freeze on your account. Other programs offer assistance to those filing for bankruptcy or starting the process. 

It is important to consider all your options when seeking to settle a debt owed and when trying to find a resolution in order to protect you and your family from potential fraud. Many who have worked with the IRS to find resolution find the process much friendlier than anticipated, and are able to harmoniously find a solution.