Is There Really an IRS Tax Debt Relief Program?
Not really – but kind of. The IRS doesn’t specifically have a program called the IRS Tax Debt Relief Program. Instead, there are multiple tax debt relief options offered by the IRS that all have different names, unique application processes, and distinct eligibility criteria.
So, why do you hear so much about the “official IRS tax debt relief program” if it’s not real? That’s because tax resolution companies use this phrase to market their services. It sounds compelling to readers, and it allows these companies to build urgency and get taxpayers to sign up for their services without researching their companies.
To help you out, this post looks at real IRS tax debt relief options. Then, it goes over some of the misleading names these companies use to market tax resolution services.
Key takeaways:
- The IRS has many options for people who owe tax debt, but there’s not a specific option called the “Tax Debt Relief program.”
- Tax resolution companies often advertise this program as if it’s a limited-time offer that you need to apply for now, but that’s not the case.
- Rather, the IRS offers specific relief options that apply to taxpayers in different situations – for example, installment agreements, offers in compromise, or currently not collectible status.
- Damien’s Law can help you get past the jargon and find real relief.
- Be cautious about companies that aren’t straightforward about the real options.
What Is Tax Resolution?
Tax resolution is the process of providing taxpayers with support in resolving tax burdens, including tax penalties, tax return errors, tax debt, tax fraud, tax audits, tax appeals, unfiled returns, or other tax problems.
While tax resolution on its own is not a scam or fraudulent, many companies use misleading language in this arena, especially about tax debt. To help you distinguish between legitimate tax pros and subpar tax resolution companies, we cover common warning signs below.
Is the IRS Tax Debt Relief Program a Scam?
Tax help is not a scam, but there is no official IRS program that you can enroll in to get immediate help. A company promising to help you “enroll” or “apply” for a tax debt relief program is being misleading.
Tax resolution organizations may make claims that they can help you navigate IRS tax debt relief programs. They may advertise that you could get your tax debt forgiven or reduced. They may also claim that there’s a completely new tax debt relief program that you have to take advantage of right away, or else you’ll miss your chance.
You may get calls about tax debt relief programs where the company claims it will give you access to the best IRS tax debt relief program out there.
Sure, these promises all sound great. But the truth is, this is all marketing speak to get your business and keep you from researching and applying for relief on your own. Once you start working with these companies, you’ll find out that complete tax debt forgiveness is unlikely.
What Is a Tax Debt Relief Program?
As noted above, there isn’t a specific tax debt relief program, and unfortunately, this isn’t the only phrase that big tax resolution firms use to draw in customers. Here are some of the other marketing phrases used by these companies and an explanation of what they really mean:
- IRS hardship: The IRS’s currently not collectible status allows you to avoid IRS collection actions if you prove that you cannot afford to pay the taxes owed. This option does not eliminate your tax debt, and if your finances improve, you will have to pay.
- IRS one-time forgiveness: The IRS does not offer a one-time tax debt relief program. However, this phrase usually refers to the first-time penalty abatement offered by the IRS. This abatement only applies to tax penalties the IRS issues to you, not your tax debt.
- IRS Fresh Start program: There is no program to apply for through the IRS called “Fresh Start.” This term was used back in 2011 when the IRS made policy changes that made it easier to qualify for offers in compromise and other relief programs. No new program was introduced.
- Zero tax plan/zero tax debt relief program: There is no zero tax plan – you will have to repay your tax debt unless you have limited assets and income and can qualify for a settlement. These phrases make consumers believe they can reduce their tax bill to zero. This is not the case. Zero tax language has been recently associated with scams, where fraudsters are trying to get your information. Don’t respond to any type of communication that uses this language.
- IRS writes off millions a year: This is another common phrase you may hear that aims to trick you into thinking the IRS could simply write off your tax debt. Unfortunately, this phrase is misleading. While the IRS does allow some taxpayers to settle for less than they owe, taxpayers must meet strict application criteria to qualify.
The bottom line: these terms don’t refer to some new program that you can qualify for to get your tax debt forgiven. Also, beware of any language that states that time is running out, since these are actually ongoing programs. Watch for these misleading phrases when you’re seeking tax debt assistance.
Many companies don’t use the actual names of the IRS options to prevent you from looking them up yourself.
If you see any of the following information, it’s inaccurate, misleading, and does NOT represent a real IRS tax resolution solution.
| Fake Program Name | What It Really Means | What to Know |
|---|---|---|
| Zero Tax Program / Zero Tax Forgiveness | Often used in scams or aggressive marketing | No such IRS program exists; typically used to lure people into scams. |
| Fresh Start Program | Loosely refers to changes in IRS policy (2011); But often used in marketing as if it’s a real program that you can apply for. | Not an application-based program; it was a set of changes that made it easier access to Offer in Compromise or Installment Agreements |
| Trump Tax Forgiveness Program | Made-up program exploiting political branding | No IRS relief program is tied to any president; entirely false |
| Pennies on the Dollar Program | Refers to Offer in Compromise (OIC) | Although it’s not impossible, very few people qualify; the phrase is highly misleading |
| One-Time IRS Forgiveness | Refers to First-Time Penalty Abatement | May remove penalties, not the full tax debt; used to overpromise results |
| IRS Hardship Program | Refers to Currently Not Collectible (CNC) | This is a real IRS status, but often misused in ads as a “program” |
| Zero Tax Elimination Program | Variant of “Zero Tax” scam language | Watch out — not real, often used in phishing or fraud campaigns |
What Are the Real Options for Relief?
The IRS offers several different options depending on your financial situation, income, compliance history, filing status, and other factors. Here are the choices you have—minus the misleading advertising jargon—when you’re having trouble paying what you owe the IRS:
Installment Agreements
You may read about payment plans or installment agreements from the IRS, which mean the same thing. When you’re unable to pay your tax bill in full by the deadline, this may be the right option.
There are both short-term and long-term installment agreements. A short-term plan is where you’ll pay within 180 days, and a long-term plan is a longer monthly payment arrangement that typically lasts three to 10 years.
Example. Oscar started a side business and earned more than he expected during the year. He couldn’t afford to pay the total tax debt owed at tax time. He applied for an installment agreement to make payments over the next two years to get caught up on the debt.
Partial Payment Agreements
Another type of payment plan is called a partial payment installment agreement (PPIA). A PPIA can work in situations where you cannot afford the minimum payment on an installment agreement. With this option, you pay the maximum amount you can afford every month until the collection statute expiration date (CSED), and then the IRS waives the remaining balance.
Penalty Abatement and First-Time Abatement
As briefly mentioned above, the IRS may waive penalties in some cases. The most common option is the first-time penalty abatement option (or first-time abate), which allows you to get certain tax penalties waived if you have a history of tax compliance. Eligible penalties for first-time abatement include:
The IRS states that they’ll consider any penalty amount for abatement. You must have a solid tax compliance history, meaning you’ve filed the same type of return over the last three years, and you didn’t get any penalties for those years.
First-time penalty abatement is not tax forgiveness. You still owe your complete tax liability under this option. If you’re granted abatement, only the penalties incurred will be waived, not your debt.
You can also request penalty abatement for “reasonable cause,” which refers to situations where you missed a deadline due to death, illness, disaster, or other very serious reasons.
Example: You filed late due to losing tax records in a fire. You request penalty abatement based on reasonable cause. The IRS agrees and waives the late filing penalties.
Offer in Compromise
Another common relief option is called an offer in compromise. With this option, you could actually get your tax bill reduced and settle it with the IRS. Every case is different, but the IRS evaluates whether you have a financial hardship, considering your ability to pay, your income and expenses, and the equity in your assets.
You will send an offer to the IRS that represents what you can afford to pay, along with any proof of financial hardship. You also must have:
- Filed your tax returns and made estimated tax payments.
- Aren’t declaring bankruptcy.
- A valid tax extension, if applicable.
- Made any necessary tax deposits as an employer for the current and last two quarters.
This option is a good choice if you are facing a significant hardship and cannot afford to pay off your tax bill, even under a payment agreement. However, you will have to share very detailed information about your finances with the IRS. Then, you’ll need to pay the offer in a lump sum or over 24 monthly payments.
Example: James and Amy owe $100,000 in tax debt. But they only have $100 in disposable income per month and no equity in their assets. The IRS agrees to accept a $1200 settlement.
Currently Not Collectible Status
If an offer in compromise isn’t feasible for your situation, meaning there’s no offer you can afford to pay, the next step would likely be currently not collectible (CNC) status. The IRS refers to this as temporarily delaying the collection process.
CNC may be realistic when you cannot afford to pay your tax bill because of a temporary situation. If you qualify, the IRS will stop the collections process. When your situation improves, the IRS will once again make attempts to collect what you owe.
Remember: even with CNC status, your tax bill isn’t forgiven. You are simply deferring payment with a temporary collection delay.
Example: Maria is unable to work due to suffering a spinal injury during a car accident. She owes the IRS money, but will be out of work for at least 6 to 12 months. She applies for CNC status until she can rehab and get back to work.
Innocent Spouse Relief
You may be able to lower your tax bill if your spouse, with whom you file jointly, understated what you owed on your joint return. You cannot have known about these errors. The IRS states that innocent spousal relief only applies to liability on your spouse’s income, so you can’t get relief for your income or other components on your tax return.
Example: Taylor and Baily file a joint return. Bailey fails to report $100,000 in gambling wins, and when an IRS auditor discovers the error, they assess thousands in tax, interest, and penalties. Taylor applies for innocent spouse relief – she convinces the IRS that she didn’t benefit from the income and had no reason to know about the understatement. The IRS absolves her of the liability for that portion of the tax debt.
Tax Extensions
One common misconception from taxpayers is that you shouldn’t file your tax return if you’re unable to pay what you owe. This isn’t the case. The IRS states that you need to file your tax return or request an extension by the deadline, even if you can’t afford your full tax bill.
Filing your return or requesting an extension by the April tax deadline can help you avoid the failure-to-file penalty. However, remember that the extension only applies to your filing deadline. You should pay as much as possible to limit late payment penalties.
Note that the penalty for not filing on time is 10 times higher than the penalty for paying late, and if you don’t file, these penalties will stack on top of each other. That means that even if you can’t afford to pay, you should still file, as that will help to limit your penalties.
Actual IRS Tax Debt Relief Options
The following are real tax relief strategies and methods provided by the IRS to those who need help with back taxes. You can apply directly with the IRS for these programs, or you can work with a tax professional through the process.
| Relief Option | What It Does | Who It Helps | Forgiveness Potential |
|---|---|---|---|
| Installment Agreement | Lets you pay over time with monthly payments | People who can afford full repayment | No – full debt paid |
| Partial Payment Agreement | Allows smaller monthly payments; some debt may expire | Those who can’t afford full repayment | Yes – if balance expires (CSED) |
| Offer in Compromise (OIC) | Settle tax debt for less than owed | People in serious financial hardship | Yes – IRS agrees to accept less |
| Currently Not Collectible (CNC) | Temporarily halts collections if you’re financially unable | Those with no ability to pay at all | Yes – if CSED expires during CNC |
| Penalty Abatement | Removes IRS penalties under certain conditions | First-time offenders or those with reasonable cause | Limited – penalties only |
| Innocent Spouse Relief | Removes shared liability from a spouse’s tax issue | Spouses unaware of errors on joint return | Yes – if approved by IRS |
| Tax Extensions | Lets you delay filing, not payment | Anyone who needs more time to file | No – helps avoid penalties only |
How to Spot an IRS Tax Debt Relief Scam
If you owe tax debt, you should take some time to learn how to spot scams. Consider the following tips:
- Watch out for companies that use misleading advertisements. Legitimate tax attorneys don’t resort to these tactics, and they’re bound by ethical rules that prevent them from using that type of advertising.
- Always read the notice you get from the IRS and the state comptroller. These are the only organizations that can decide if you qualify for any tax repayment strategy. No one else can. However, an experienced lawyer can give you an idea of which programs you’ll qualify for once they know a little about your financial situation.
- Never pay a whole fee upfront. Before making any payments, ask how you’ll pay for their services, what the cost will be, and what strategies or costs exist if you do not see relief from the IRS.
- Avoid companies charging a monthly “maintenance fee” for continuing to monitor or support your efforts. They may extend the process long term just to increase their compensation.
- Past results are never a promise to you. If a company says, “All of our taxpayers only paid 10% of their debt…” they are likely being misleading since every situation is vastly different. However, if they have specific success stories from specific clients, that’s a different story.
If you want legitimate help and answers to questions, don’t hesitate to seek out legal guidance from a tax attorney. Attorneys will not use this type of marketing language or gimmicky way to pull you into their “program.”
Avoid Misleading Information With Damien’s Law
Many tax resolution companies out there sugarcoat what they can do for you if you have tax debt. They make it sound like there’s a tax relief program you can apply for that will wipe out your debt. However, they’re just trying to get your business and ensure you don’t look up your options on your own.
In a lot of cases, the big nationwide tax relief firms make promises that they cannot keep. If someone promises to erase your tax debt or get you a settlement before they know anything about your situation, that’s a big red flag that you should look for a different provider.
Remember that there is no one IRS tax debt relief program that’s going to solve all your problems. The IRS does offer options, but you must qualify for them, and you usually can’t just eliminate your tax debt completely.
So what should you do? Well, the first step is finding an experienced tax or legal professional who understands tax law and your best way forward.
At Damiens Law, we get to know your unique situation and explain your options for legitimate IRS tax forgiveness or relief. Our Mississippi tax lawyer will help you avoid working with rip-off companies and ensure you understand your rights.
To get help now, contact the experienced attorney at Damiens Law to get started with better representation and tax relief guidance.
