How to qualify for IRS tax forgiveness, according to experts

CBS News

01-04-2025

With the
tax filing deadline
fast approaching, millions of Americans are rushing to finalize their returns. This time of year can be extra stressful if you have unpaid IRS taxes from previous years
and
owe more this year.
Back taxes often snowball into a financial burden with growing penalties and interest. The IRS can also levy bank accounts, place liens on your property,
garnish your Social Security disability check
and damage your credit score. These repercussions underscore the importance of tackling this debt promptly.
The good news is that several relief programs exist for struggling taxpayers. These could reduce or eliminate what you owe under certain circumstances. So it helps to know the qualifying criteria. Below, we spoke to experts about what to know, specifically.
Start tackling your tax debt here now
.
Tax problems rarely resolve themselves and often compound over time. "In my experience, if you owed last year, then you'll probably owe this [year] and next year," warns Adam Brewer, tax attorney at AB Tax Law. With ongoing tax obligations mounting, many taxpayers
need
relief options.
Joseph Leocata, JD, a certified public accountant and tax controversy advisor with Berkowitz Pollack Brant Advisors + CPAs, says tax forgiveness becomes viable "when the balance becomes insurmountable, when facing financial hardship or if the IRS intensifies collection actions." Below are three tax relief avenues to explore:
"An offer in compromise is an agreement with the IRS to settle your tax debt for less than you owe," explains Logan Allec, a certified public accountant and owner of Choice Tax Relief. The IRS accepts offers in compromise through the following approaches:
Of the above, "the most common is doubt as to collectibility," Allec says. Applying for it involves these steps:
After reviewing your financial information, the IRS calculates your reasonable collection potential. For your offer to succeed, Allec notes that "your offer amount should be at least the amount of your reasonable collection potential."
Explore your tax debt forgiveness eligibility here
.
Penalty abatement offers relief from the additional charges the IRS adds to your tax debt. "In certain circumstances, the IRS may fully or partially abate — that is, forgive — the penalties it has assessed against you," Allec explains. The IRS offers two main types of penalty relief:
The IRS has 10 years from the date of assessment to collect a tax. "We've seen millions of our clients' tax debts written off due to the IRS's collection statute expiring," Allec says.
Sometimes this happens without effort if the IRS isn't actively pursuing collection. But in many cases, tax professionals help clients enter formal arrangements such as "currently not collectible" status. Though this doesn't get rid of the debt right away, it could delay aggressive collection actions until the statute expires.
Tax professionals highlight three qualification criteria for IRS tax relief programs:
Tax relief services
exist for many financial situations, and your circumstances will determine which option works best. So, consult a professional at a
reputable tax relief company
. They can assess your situation, help gather required documentation and guide you toward the optimal approach.