If you’re like most Americans, chances are you have some debt. But that’s no reason to feel defeated!
The IRS Fresh Start Program can assist you in getting your finances back on track.
This program allows you to pay off your debts over time, so you don’t have to worry about making a substantial lump-sum payment or going bankrupt. It also allows you to lower or cancel interest, penalties, and tax liens!
In this article, we’ll discuss the IRS fresh start program, designed to offer relief to taxpayers who have fallen behind on their taxes. In particular, we’ll talk about how it works and what you can expect if you qualify.
What is IRS Fresh Start Program?
The IRS Fresh Start Program is unique for taxpayers who owe taxes to the IRS. It allows these taxpayers to make their tax debt reduced or eliminated so long as they meet specific criteria and agree to pay a portion of their tax debt over time.
The Fresh Start Program allows taxpayers with past due taxes to make lump sum and/or monthly payments toward their debt while they wait for their cases to be resolved. Once the IRS approves, participants can make these payments through an electronic funds transfer system or by mail.
If you qualify, the Fresh Start program will:
- Consider reducing or doing away with fines and interest
- Prevent having your salary garnished or having your bank account frozen.
- Allows you to keep your vehicle registration and driver’s license
- Permits international travel
IRS Tax Debt Relief
We know your worries over the IRS and all the fines, interest, and other issues that come with tax debt. However, you are not required to pay off your debt immediately. Because of this, the IRS provides various IRS programs to assist you in taking charge of your money and getting back on track.
Four typical payment opportunities are available under the Fresh Start program:
- Offer in Compromise (OIC)
- Installment Agreement
- Penalty Abatement
- Currently-Not-Collectible (CNC)
The IRS is always willing to work with the indebted taxpayer to come to a resolution so that the agency continues to receive some payment and the debt isn’t overwhelming.
- Offer in Compromise (OIC)
If you want to settle your tax burden with the IRS for less than you are obligated to, you can make an offer in compromise. It can only be used by people with debts under $50,000 and a steady source of income. You’ll still be responsible for paying your taxes and submitting returns if you qualify.
Depending on your economic eligibility, an Offer in Compromise will, if authorized, allow you to make monthly payments to settle your tax burden over time. If the IRS determines that it is appropriate for your case or condition, they may present you with additional options during this procedure, such as a payment plan or currently not collectible status.
- Improved Installment Agreement
The IRS revised the borrowing limit for streamlined installment agreements and the maximum timeframe for extending the contracts in a 2012 revision to the tax legislation. A streamlined installment agreement is a plan to repay the whole amount of tax, penalties, and interest over a defined period. In exchange, the borrower is not required to provide a financial statement to the IRS. The collection statute requires you to pay the amount before the balance’s termination date.
According to the IRS, a Streamlined Installment Agreement was previously only available to taxpayers with tax obligations of up to $25,000. The upper limit is now $50,000. As a result, more people can afford to pay off their IRS debt over time with long-term payment arrangements while maintaining the privacy of their assets, income, and spending data. The Fresh Start Initiative has allowed the maximum period of a Streamlined Installment Agreement to extend to six years!
- Penalty Abatement
Another IRS payment plan you can choose to seek relief from penalties, fees, and interest on your tax return is penalty abatement. The IRS may remove the sentences imposed on your account if you are eligible for penalty abatement. The IRS will evaluate your request based on your justification and whether you acted in good faith.
There must be a strong justification for filing late or not filing to be eligible for a penalty reduction. Among the grounds are:
- Natural catastrophe or casualty
- Critical sickness or death
- Severe circumstances (such as a death in the family) that delayed the filing
- Currently-Not-Collectible Status
For taxpayers unable to pay their tax obligations, the IRS operates a program called Currently-Not-Collectible. People who are frequently experiencing difficulties paying their debts due to financial or other issues are taking advantage of this approach.
The IRS will notify you in writing that your account has been classified as Currently-not-collectible if you find yourself in this circumstance. Not paying at this time won’t result in consequences for you (like interest and penalties). Nevertheless, you will need to resume paying taxes if your financial status improves.
Federal Tax Lien Amendments
Previously, the IRS would release a Notice of Federal Tax Lien to anyone with a tax debt of $5,000 or more. For liabilities of at least $10,000, a Notice of Federal Tax Lien must be filed. This means that even if you believe you owe a sizable amount in overdue taxes, as long as it is less than $10,000, you can usually avoid a lien. As a result of the Fresh Start Initiative’s improvements, more taxpayers can now completely avoid liens or have liens removed after they have been filed.
After the adjustments are implemented, the IRS won’t subject you to a Notice of Federal Tax Lien if you agree to establish a streamlined payment arrangement. Previously, if your sum were over $25,000, the IRS would place a tax lien on your property. If you set up a streamlined installment agreement with direct debit, even if you owe up to $50,000, the IRS will most likely not establish a Notice of Federal Tax Lien against you. This action improves real estate sales.
Frequently Asked Questions for IRS Fresh Start Program
- How can the IRS Fresh Start program help me?
The IRS Fresh Start program provides relief from the penalties of the Internal Revenue Code. The IRS Fresh Start program is intended to support taxpayers who have neglected their tax obligations. The IRS Fresh Start program allows you to clear up your past-due tax debt and start fresh with a clean slate.
You can get your debt forgiven by the IRS and save hundreds of dollars in fines and interest.
It is advisable to consult with certified tax experts to assess your current tax situation properly and apply the necessary actions and negotiations for tax reduction or even tax elimination.
- How can I avoid fraud with the IRS Fresh Start program?
Never pay for assistance with your tax problem; be wary of any company that demands payment upfront. Before signing anything or providing them with any personal information, you should exercise caution and conduct more investigation.
The IRS will never contact you unsolicited by phone or email. If they do contact you, it will be by mail.
The IRS will never ask for payment in gift cards or prepaid debit cards. This is a common tactic of scammers because they can’t be traced or tracked down later if something goes wrong with the transaction.
The IRS will never threaten arrest or other legal action if you don’t pay what they say you owe them immediately—that’s not how things work!
- Can you work out a deal with the IRS for outstanding taxes?
Yes, is the simple reply. Back taxes can be negotiated with the IRS. However, doing it yourself is only advised for some people.
The IRS’ Fresh Start Program Gives Many Taxpayers a Second Chance
There’s no better window of opportunity to get a fresh start on your taxes. You can do it!
Remember, the only thing holding you back from using the money you’ve earned is yourself. You don’t have to let your fears hold you back anymore. With informed planning and preparation, you can ensure that your tax debt relief is on the way!
We believe in looking after our clients at all times, so if you ever need anything from us, don’t hesitate to reach out!