Does the IRS Forgive Tax Debt?

The real channels

Debt actually goes away through four routes: an offer in compromise that settles for less, Currently Not Collectible status that pauses collection while the clock runs, the collection statute expiring after about ten years, and bankruptcy for certain older debts. Each has strict rules. None is automatic.

What the ads get wrong

The settlement ads imply almost everyone can wipe out most of their debt cheaply. In reality, an offer in compromise is approved only when your assets and future income genuinely cannot cover the balance. Many people who call those firms do not qualify, which is the part the ads leave out.

The real ways debt gets reduced

Each is something you request and the IRS reviews. None is a guarantee.

• Settle for less with an offer in compromiseWhen your assets and income cannot cover the balance.
• Pause collection with hardship statusCurrently Not Collectible can hold the debt while the clock runs.
• Let the collection clock expireThe IRS generally has only ten years to collect.
• Remove the penalty portionPenalties are often reducible even when the tax is not.

Related IRS notices

Not your notice? Look yours up on the home page.

The legal basis