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IRS Debt ForgivenessIRS debt forgiveness. Nobody likes paying taxes, but if you live in the USA and you find yourself with large tax debt that you are unable to pay, there are programs in place to help you through the difficulties. The first of these is the “life jacket” The life jacketAs the name suggest this is to stop you from drowning. If you have tax debt that you simply cannot pay, you can temporarily defer payment and stop wage garnishment. To do this you have to prove that all of your income is needed for living expense and that there is no surplus. This is not forgiveness of debt but it can buy you time. To apply for this relief file form 433A for individuals or form 433B for businesses. The next program is the “chapter 7 bankruptcy”.Chapter 7 bankruptcyBy filing chapter 7 certain taxes can be forgiven and a fresh start granted. By knowing that you do actually have the ability to have tax debt absolved in bankruptcy court, it is possible to use this as leverage with the IRS and negotiate a settlement of the outstanding debt. The IRS will often choose to make an offer in compromise rather that lose all of it in bankruptcy.Offer in compromiseThis is where you and the IRS agree that you pay a portion of the debt. This is good if you wish to avoid all of the disadvantages of chapter 7 bankruptcy and offers an alternative. You can end up paying as little as 10 cents on the dollar.As always this is no substitute to professional advice. Always seek professional guidance in these matters.
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