Glossary

Tax Forgiveness

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Tax forgiveness refers to situations where the IRS agrees to cancel part or all of a taxpayer’s debt. This usually occurs through programs like the Offer in Compromise (OIC), where the IRS agrees to settle a tax debt for less than the full amount owed. Tax forgiveness can also be granted under certain conditions, such as financial hardship or natural disasters.

Taxpayers must meet specific criteria to qualify for tax forgiveness, including:

Inability to pay the full debt due to financial hardship.
Accurate and up-to-date filing of all tax returns.
The offer made represents the Reasonable Collection Potential (RCP) for the taxpayer.

Tax forgiveness does not mean the debt is erased entirely. Interest and penalties may still apply to the remaining balance, and taxpayers must comply with future tax obligations to avoid reinstating the forgiven amount.

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