With the tax filing deadline fast approaching, millions of Americans are rushing to finalize their returns. This time of year can be extra stressful if you have unpaid IRS taxes from previous years and owe more this year.

Back taxes often snowball into a financial burden with growing penalties and interest. The IRS can also levy bank accounts, place liens on your property, garnish your Social Security disability check and damage your credit score. These repercussions underscore the importance of tackling this debt promptly.

The good news is that several relief programs exist for struggling taxpayers. These could reduce or eliminate what you owe under certain circumstances. So it helps to know the qualifying criteria. Below, we spoke to experts about what to know, specifically.

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How to qualify for IRS tax forgiveness, according to experts

Tax problems rarely resolve themselves and often compound over time. “In my experience, if you owed last year, then you’ll probably owe this [year] and next year,” warns Adam Brewer, tax attorney at AB Tax Law. With ongoing tax obligations mounting, many taxpayers need relief options.

Joseph Leocata, JD, a certified public accountant and tax controversy advisor with Berkowitz Pollack Brant Advisors + CPAs, says tax forgiveness becomes viable “when the balance becomes insurmountable, when facing financial hardship or if the IRS intensifies collection actions.” Below are three tax relief avenues to explore:

Offer in compromise (OIC)

“An offer in compromise is an agreement with the IRS to settle your tax debt for less than you owe,” explains Logan Allec, a certified public accountant and owner of Choice Tax Relief. The IRS accepts offers in compromise through the following approaches:

• Doubt as to collectibility: Make a case to the IRS that they should accept what you’re offering because there’s “doubt” that it could collect more without causing economic hardship.
• Doubt as to liability: Provide evidence that you don’t owe the amount the IRS claims you do.
• Effective tax administration: Show that while you can pay the full amount, doing so would create an inequitable situation due to exceptional circumstances such as serious illness.

Of the above, “the most common is doubt as to collectibility,” Allec says. Applying for it involves these steps:

• Submit Form 433-A (OIC) with complete details about your assets, income, expenses and liabilities
• Include Form 656 (the official offer in compromise contract)
• Provide supporting documents for all financial information
• Pay the application fee and the non-refundable initial payment

After reviewing your financial information, the IRS calculates your reasonable collection potential. For your offer to succeed, Allec notes that “your offer amount should be at least the amount of your reasonable collection potential.”

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Penalty abatement

Penalty abatement offers relief from the additional charges the IRS adds to your tax debt. “In certain circumstances, the IRS may fully or partially abate — that is, forgive — the penalties it has assessed against you,” Allec explains. The IRS offers two main types of penalty relief:

• First-time abatement: This program is available to taxpayers with no penalties in the previous three tax years. It forgives failure-to-file and failure-to-pay penalties for one tax year.
• Reasonable cause abatement: You must prove that circumstances beyond your control prevented tax compliance. Examples include natural disasters, serious illness or an inability to obtain necessary records. The IRS reviews these requests case-by-case with an “element of subjectivity,” according to Allec.

Currently not collectible (CNC) status

The IRS has 10 years from the date of assessment to collect a tax. “We’ve seen millions of our clients’ tax debts written off due to the IRS’s collection statute expiring,” Allec says.

Sometimes this happens without effort if the IRS isn’t actively pursuing collection. But in many cases, tax professionals help clients enter formal arrangements such as “currently not collectible” status. Though this doesn’t get rid of the debt right away, it could delay aggressive collection actions until the statute expires.

Tax relief qualification criteria to know

Tax professionals highlight three qualification criteria for IRS tax relief programs:

• Financial hardship: “Taxpayers qualify for most types of tax relief if they demonstrate to the IRS that making payments toward their tax debt causes financial hardship,” explains Leocata. This means you can’t cover your tax debt and basic living expenses.
• Current compliance: You must be current on filing requirements and tax deposits for the current year. This shows the IRS you’re trying to meet your obligations.
• Installment payment threshold: “If the balance is more than $25,000 but less than $50,000, [you must] pay off the balance within 72 months by direct debit to avoid a lien filing,” Brewer advises. This is crucial if you’re trying to buy, sell or refinance a home without the IRS getting in the middle of the transaction.

The bottom line

Tax relief services exist for many financial situations, and your circumstances will determine which option works best. So, consult a professional at a reputable tax relief company. They can assess your situation, help gather required documentation and guide you toward the optimal approach.