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What Is The Fresh Start Program?

The IRS Fresh Start Program (also called The Fresh Start Initiative) helps taxpayers who owe the IRS pay back taxes and avoid tax liens through various payment plans. The Fresh Start Program is an umbrella term for the IRS’s different tax debt relief options. Changes implemented by the program largely revolved around tax liens, installment agreements, offers in compromise, and currently not collectible charges.

The IRS Fresh Start Program is an excellent option for unintentional tax offenders because of its flexibility.

Some people unintentionally violate tax laws, so the IRS created the Fresh Start Program (Fresh Start Initiative) to assist them. The IRS’s non-serial offender policies are a flexible set of rules that may be the ideal solution for those who are eligible for them.

The Fresh Start Program allows taxpayers with back taxes to enter an agreement that stretches out payment over months, though no more than 5-6 years. To qualify, you’ll need to provide direct debit payments and:

  • Be able to pay off your tax obligation in a resolution-specific amount of time
  • Be in tax trouble with the IRS
  • Have up-to-date tax filings through the most current year

Video Explanation Of The IRS Fresh Start Initiative

How Does The Fresh Start Program Work?

There are four main programs available to taxpayers through the Fresh Start Program:

What Is An Installment Agreement?

Through the Fresh Start Program, taxpayers can choose to pay the IRS a regular monthly payment instead of the whole debt at once. Installment agreements are available. Every month, taxpayers can make an agreed-upon payment to the IRS. Payments are directed to the taxpayer’s overall tax debt and continue until it is completely repaid.

You will no longer receive IRS collection letters or be subject to penalties once you’ve signed up for an installment plan.

This plan also provides the IRS proof that you are willing to take care of your debt. Although the monthly payment you make through the Fresh Start Program may change, the IRS will continue to add interest to your total debt. This means you will end up paying more than what you originally owed.

What Is An Offer In Compromise?

An OIC is an arrangement between a taxpayer and the IRS that pays the taxpayer’s tax liabilities in whole or part. When the IRS does not accept an OIC, they usually believe they can collect the whole amount as a lump sum or through a payment agreement. The IRS uses the taxpayer’s income and assets to determine the reasonable collection potential. OICs must be accepted according to legal requirements.

What Does “Currently Not Collectible” Status Mean?

Unlike the other Fresh Start tax programs, Non-Collectible Status is a ‘status’ rather than a form of tax relief. The IRS might place a taxpayer in Currently Non-Collectible Status if they cannot pay their taxes. Tax levies, wage garnishment, tax liens, and IRS collection notices are all prohibited in this status. To obtain Fresh Start tax relief without IRS interference, a taxpayer must be in Currently Non-Collectible Status. 

What Is Penalty Abatement?

The IRS refers to Penalty Abatement as Fresh Start tax relief. Penalty Abatement is a type of penalty mitigation. However, the IRS will only offer Penalty Abatement with a reasonable cause. See the IRS website for a list of IRS locations where you can request Penalty Abatement. You can also request Penalty Abatement by speaking with IRS personnel at a local office. You may request Penalty Abatement at any IRS collection level, including at a local IRS office. You may request Penalty Abatement at any IRS collections level, including at a local office. However, a local IRS office may only offer Penalty Abatement up to $100. Making a request is free.

How To Apply:

You can apply for the Offer In Compromise Here: https://www.irs.gov/payments/offer-in-compromise

The IRS will not accept a request for tax relief through the Fresh Start Initiative without sufficient evidence. When you mail your request, include as much supporting evidence as possible. Documentation is the best type of evidence against the strict IRS Fresh Start Program standards. You must have a letter with your Form 843 explaining why you cannot pay your outstanding tax debt.

You must include your unfiled or missing tax returns, your current estimated tax payments, and the current withholdings on your recent paychecks to qualify for the Fresh Start Program for tax relief. Finally, all filings for the last six months must be present or correct.

Who Qualifies For The Program?

Individuals

Taxpayers who qualify for the program are those ready to pay their tax debt through installments paid over a specific period and decided based on a repayment structure.

If you are an individual taxpayer happy to repay the debts you owe in a series of installments with a direct payment structure, you could benefit from the IRS Fresh Start Program. This agreement allows qualified individuals to pay off their taxes in smaller, more manageable amounts over some time, with limited penalties on tax liability.

The IRS will consider your ability to pay, current income and expenses, and asset equity in determining what they believe you can reasonably repay.

Each option has a different procedure, qualifications, and application process.

You have to meet the requirements listed below:

  • You owe less than $50,000 or more than $50,000, but you can reduce your debts to this amount before starting the program.
  • You can pay off your outstanding debt in less than 60 months.
  • Your tax return is filed and up to date.
  • This is the first time you’ve fallen behind on payments to the IRS
  • You will agree to a direct payment installment agreement
  • You will maintain the installment agreement, keep up to date with tax filings, and will not incur further tax debt while you are paying your installments
  • You will file for OIC and can pay off the agreed Fresh Start Initiative settlement amount within 12 months.

As a first-time debtor, you may also be eligible for a reduction of specific penalties. For example, if you owe less than $25,000 or you can reduce your debts to this amount before starting the program, you may also qualify to have a federal tax lien removed.

The program offers three repayment options: an extended installment agreement, a tax lien withdrawal, and an offer in compromise.

 

For more information on how to apply for the IRS Fresh Start Program, please get in touch with us for a free tax case review.

Businesses

If your business owes taxes, you could also be eligible for the Fresh Start Program. In this scenario, you will need to meet the following requirements:

  • Your company owes less than $25,000
  • You will be able to repay the total amount within 34 months
  • Your business is up to date with current federal tax filings and payments
  • It’s the first time your company has fallen behind on payments to the IRS
  • You will also need to fill out Form 433-A Collection Information Statement for Wage Earners and Self-Employed Individuals. The qualified business income deduction can be an excellent way to reduce your income taxes for many taxpayers who operate small businesses.
  • The goal is to make the payments affordable so you can pay them on time without a financial burden.

Of course, we’ve only touched on the basics of the program. If you have any further questions, would like a firm answer regarding whether you’re eligible for the program or not, or want to apply for the Fresh Start Initiative, don’t hesitate to contact us! Whatever your situation may be, our qualified, experienced, and friendly tax professionals will be able to guide you in the right direction.

For more information on how to apply for the IRS Fresh Start Program, please contact us for a free tax case review.