The IRS Fresh Start program is an approach for taxpayers to get out of tax debt. The program allows people to have their tax debt forgiven or reduced by applying for an offer in compromise or filing an amended return.
If you qualify for these arrangements, then you may be able to start over with your taxes.
Fresh Start: IRS Fresh Start Program
The Fresh Start program is a way for you to pay your past tax debt without paying the entire amount. The scheme allows you to pay what you can afford and then make monthly payments for up to five years.
If you are eligible, the Fresh Start program will:
- Reduce or eliminate penalties and interest
- Avoid garnishment of your wages or freezing of your bank account
- Allow you to keep your driver’s license and car registration
IRS Tax Debt Relief
We know you’re concerned about the IRS and all the penalties, interest, and other problems that come with tax debt. But you don’t have to pay off your debt in full right away. That’s why the IRS offers a range of IRS programs to help you take control of your finances and get back on track.
The Fresh Start program offers four main options:
- Offer in Compromise (OIC)
- Installment Agreement
- Penalty Abatement
- Currently-not-collectible(CNC)
To ensure that the organization receives some payment and the debt isn’t completely overwhelming, the IRS is always prepared to reach agreement with the indebted taxpayer.
Offer in Compromise Program
An offer in compromise is an arrangement you make with the IRS to resolve your tax debt for less than you owe. It’s only available for individuals who owe less than $50,000 and have a regular source of income. You’ll still be responsible for paying your taxes and filing returns if you’re eligible.
If approved, an OIC will allow you to pay off your tax debt over time through monthly payments based on what your income qualifies. The IRS may offer other options such as a payment plan or currently not collectible status during this process if they feel it’s appropriate for your case or situation.
Improved Installment Agreement
In a 2012 amendment to the tax code, the IRS modified the debt ceiling for streamlined installment agreements and the maximum period that the contracts may be extended. A streamlined installment agreement is known as an arrangement to pay back the whole amount of tax, fines, and interest over a predetermined period of time. In return, the IRS is not required to receive a financial statement from the borrower. You must settle the amount in full before the balance expiration date under the collection statute.
Previously, the IRS restricted the use of a Streamlined Installment Agreement to taxpayers with tax debts of up to $25,000. That limit has been raised to $50,000! As a result, more people can return their IRS debt over a long period with long-term payment plans while still protecting their assets, income, and expenditure information. A Streamlined Installment agreement’s maximum term can now be up to six years, thanks to the Fresh Start Initiative!
Penalty Abatement
Penalty abatement is a process by which you can apply for relief from penalties, fees, and interest on your tax return. If you qualify for penalty abatement, the IRS may waive the penalties that are assessed against your account. The IRS will consider your request based on your reasonable cause and whether or not you have acted in good faith.
To qualify for penalty abatement, there must be reasonable cause for filing late or failing to file at all. Reasonable cause includes:
* Natural disaster or casualty
* Serious illness
* Other circumstances (such as a death in the family) that prevented timely filing
Currently-Not-Collectible Status
The IRS has a program called Currently-not-collectible, which is a special status for taxpayers who can’t pay their tax liabilities. It’s often used by people who are dealing with financial hardship or other challenges that make it difficult for them to pay what they owe.
If you’re in this situation, the IRS will send you a letter telling you that your account has been placed in Currently-not-collectible status. You won’t be penalized for not paying at this time (like interest and penalties). If your financial situation improves, though, you’ll have to start paying your taxes again.
Amendments to Federal Tax Liens
Before the IRS Fresh Start platform, anyone with a tax liability of $5,000 or more would acquire a Notice of Federal Tax Lien from the IRS. A Notice of Federal Tax Lien must be filed with a minimum obligation of $10,000. This implies that even if you believe you owe significant back taxes, as long as it is less than $10,000, you can typically escape a lien. More taxpayers can now avoid liens entirely or have a lien dismissed after it has been filed, thanks to reforms made by the Fresh Start Initiative.
Since the revisions were made, if you agree to create a streamlined payment arrangement, the IRS won’t submit a Notice of Federal Tax Lien. Before the initiative, if your balance is over $25,000, the IRS would issue a tax lien. The IRS will certainly not file a Notice of Federal Tax Lien against you if you establish a Streamlined Installment arrangement with direct debit, even if you owe up to $50,000. This makes it much simpler to sell real estate.
How do I benefit from the IRS Fresh Start scheme?
The IRS Fresh Start arrangement can be a massive help if you’re having trouble paying off your debt to the IRS. It’s not free, but it’s less expensive than hiring an attorney or other representation to negotiate with the IRS on your behalf.
You can have the IRS forgive your debt and save yourself thousands of dollars in penalties and interest just by taking advantage of this program!
How can I stay clear of IRS Fresh Start program scams?
Here are quite a few red flags to be cautious for:
- Paying upfront fees.
You should never have to pay for help with your tax debt, and any company trying to collect money from you upfront should be a big red flag. You should be cautious and do more research before signing anything or giving them any personal information.
- Signing a contract or paying a percentage of your tax debt.
No one should ever ask you to sign a contract without thoroughly reading and understanding it first, especially when the tax debt relief agency asks for money in return! Just as important: no one should try using scare tactics like telling you that the government will take everything away unless they help.
Can you negotiate back taxes with the IRS?
The direct answer to this question is yes! It is possible to negotiate back taxes with the IRS. However, it is not recommended for most people to do so yourself.
This is because the IRS has a lot of experience in dealing with people who owe them money and knows what methods are likely to work best when trying to collect on those debts. If they suspect you are trying to avoid paying your taxes by filing false returns or otherwise attempting fraud, they will be more likely to take legal action against you. This results to and may include garnishing wages or placing liens against property owned by you until the total amount of the debt has been paid.
Do the Fresh Start regulations still hold, and do I require a professional to use them?
Yes, the Fresh Start guidelines are still in force. The decision to hire a tax debt relief expert is yours because one of the goals of the revisions was to make it simpler for taxpayers to handle things on their own. You are more likely to require expert assistance the more you owe, or your case is more complicated. Additionally, remember that a qualified tax professional, such as a lawyer, CPA, or enrolled agent, can assist you in paying off your tax burden as cheaply as possible.
Seek tax debt relief only from professional agents.
IRS Fresh Start is the most effective way to get it if you’re looking for relief from tax debt.
Tax debt is a serious matter, and it’s essential to seek help from the right professionals.
That’s why we at Tax Fresh Start Initiative are here to help you find the tax relief services you need. We work with expert agents with years of experience in all areas of tax law and can assist you in restoring your financial stability.
The IRS Fresh Start plan is a great way to get back on track with your taxes. It’s also a good option if you’ve made mistakes in your past that you want to correct now. If you agree that this could be informative about your situation, reach out to an accountant or tax professional like Tax Fresh Start Initiative as soon as possible!
