Does IRS Really Write Off Bad Debt Cases? Michael D. Sullivan, Former IRS Agent Explains

There are a lot of myths out there in regarding facts that come out from tax resolution companies and I am here to clear the air on one of the issues, “does IRS really write off millions of dollars a year in back taxes?”

The answer is yes and no, let me explain.  There are details.

 

The Internal Revenue Service generally has one of five closing methods they use on open IRS collection cases.

 

The closing methods are the following,

 

1. hardship or currently not collectible CNC,

2 .payment agreement,

3. offer in compromise,

4. bankruptcy, or,

5. the statute of limitation expires.

 

Those are the five general ways that IRS closes their cases and their inventory on open IRS debt cases.

 

So the question is does IRS write off millions of dollars a year and back taxes? YES!

 

The IRS hardship program or currently not collectible program is most likely the program that the tax resolution companies are pointing to what it says IRS rights off millions of dollars a year.But that is no absolutely  true.

 

Which programs does IRS have to write off taxes

 

When the IRS accepts an offer in compromise for pennies on the dollar technically the IRS writes off million dollars a year based on the offer program alone.

When the statute of limitations expires because of the 10 year expiration. Then again yes, IRS rights off millions of dollars appears alone.

When the taxpayer files a Chapter 7 bankruptcy proceeding IRS discharges the taxpayer’s tax debt thus writing off millions of dollars of years alone.

Many times these tax resolution companies are pointing to the hardship are currently not collectible program which is really misleading that says IRS write-off million dollars of yours alone pointing to the currently not collectible a hardship program.

 

Important :

40% of all open cases and the IRS inventory close because at the current time the IRS cannot collect the liability from taxpayers due to their current financial condition and statement.

But the reality of this program is that in one, two or three years later the Internal Revenue Service brings the case out back to the field to rework and will require a new financial statement and then new determinations on the cases are made.

At that point in time the IRS will decide whether it can collect the tax in full, place the case back and hardship or currently not collectible, set up payment agreements,  and thus the repeated cycle.

So yes IRS does write off millions a year but you need to know the facts.

Everyone’s each unique financial statement will determine how the Internal Revenue Service is going to close the case.

If you have any questions please feel free to call us today and we can review all the various programs IRS has. Speak to true IRS tax experts.