Close to a million taxpayers owe the IRS money at any given time. While the IRS makes sincere attempts at collecting each penny owed to the government, in reality it does not have the resources to pursue each individual debtor.

To lighten its own workload and to extend a bit of mercy to taxpayers, the IRS is willing in some cases to relinquish its claim to a debt. If you owe back taxes, you could escape paying the amount in full by taking advantage of one of these IRS tax debt relief options.

Tax Debt Forgiveness

Some late night commercials blare out promises of getting your tax debt forgiven, even if you owe thousands of dollars to the IRS. In reality, no outright debt forgiveness program exists. 

However, your tax slate could be wiped clean if your situation meets certain guidelines. For example, the IRS by law cannot collect on a debt for more than a decade. If you have owed this money for at least 10 years or more, your back taxes should be forgiven because the government cannot legally collect on the amount.

Likewise, the IRS generally will not collect on a debt that has a low Realistic Collection Potential, or RCP. An account is said to have a low RCP if the debtor:

• Is low-income
• Has no assets like bank accounts or real estate that can be seized and liquidated
• Has no way to make payments on the amount

If you meet any of these criteria, your own account could be labeled as RCP. While not technically forgiven, the IRS typically will not make any attempts to collect on what you owe it.

Like the RCP option, the Non-Collectible Status also prevents the IRS from collecting on a debt. This status means that you do not have the money or assets to pay what you owe. 

The program was designed to give taxpayers time to earn higher incomes or come up with the money to pay their debts. However, this status in some cases runs down the proverbial clock for how long the IRS can collect on the debt. Once your NC account hits the 10-year mark, the IRS can no longer demand that you to pay your owed taxes.

Finally, the IRS is unable to pursue collection activity against a taxpayer who files for Chapter 7 bankruptcy. In rare cases, bankruptcy will allow for the forgiveness of tax debts.

Even while the case is pending, the IRS cannot contact you or make an attempt to collect on what you owe. If the court rules that your debt must be forgiven, the IRS likewise cannot pursue any future action against you for that amount.

The Fresh Start Program

These options do exist and are most commonly utilized when people want to have what they owe entirely forgiven. However, the criteria for getting a debt entirely erased can be stringent and time-consuming. When you want to settle what you owe in a more timely manner, you may select an option that exists under the IRS' Fresh Start Program.

The Partial Payment Installment Agreement option is the most commonly utilized under this program. The PPIA allows you to make affordable payments on your account until it is paid off in full or you have paid on the debt for 10 years, whichever comes first.

You also could pursue an Offer in Compromise. This option allows you to settle your debt. You could be granted an OIC if you:

• Are in full compliance with the IRS
• Owe a new debt
• Have no plans or cannot file for Chapter 7 bankruptcy
• Have not been turned down for an OIC in the past

You can file for an OIC on the IRS website or allow a tax professional to guide you through the process. 

With more than one million people owing it money, the IRS realizes that it cannot collect on every delinquent account. You can have your own account settled or eliminated by exploring these debt relief options.