IRS Fresh Start Program – The Ultimate Guide

We all can count on two things – death and taxes. However, there are certain exceptions possible – like the IRS fresh start program.

Many are not even aware that this program exists, though they should know about it, as it can help you out of tough economic situations. The last thing you want is to owe money to the IRS – so it’s important to clear up any tax debts as soon as possible.

A Comprehensive Guide To The IRS Fresh Start Program

Let’s face it – it’s terrifying to receive a letter from the Internal Revenue Service (IRS), especially if you have unpaid taxes and bills from the prior year. You may even think that there is no way out when that happens.

But did you know that the IRS has a program that offers flexible payment methods for you to be able to catch up with your due taxes? This program is known as the IRS Fresh Start Program, which aims to help ease the burden of taxpayers who haven’t paid their dues for several years.

Read further to learn more about the IRS Fresh Start Program, how it works, what requirements do you need and how to apply.

What Exactly Is The IRS Fresh Start Program?

The IRS Fresh Start Program is designed in a way that would allow people to pay years of substantial tax debts feasibly over the course of 6 years. As a taxpayer, you basically have to make monthly payments based on your current income and liquid asset’s value.

And by the end of the six-year period, your tax debts should already be fully paid.

The IRS Fresh Start Program makes the process of paying back your heavy tax debt simpler. Aside from that, it also helps taxpayers avoid the many things that could pose a challenge in owing a tax debt to the Internal Revenue Service.

These determinants may include penalties, tax liens, interest, seizure of assets, and wage garnishments.

Take note that those who owe a tax debt of $50,000 below are qualified to apply for the IRS Fresh Start repayment process at any time. If you are eligible, you can choose one of the three repayment options that will be made available to you.

When Did The IRS Fresh Start Program Initiate?

The Internal Revenue Service started the IRS Fresh Start Program back in 2008, and in 2012, they expanded to help in easing the financial burdens of people who owe up to $50,000 worth of tax debts. This program is made available for both individual taxpayers, as well as business owners.

Besides that, the premise of its design considers the other circumstances faced by people, which will be detrimental in determining their capacity to repay their tax debts. These circumstances will include situations like unemployment.

One example is for those who have lost their jobs for more than 30 days – they have eligibility to waive their IRS penalties. Aside from that, they can also request a six-month extension to file and pay their taxes without worrying about expensive IRS fees.

IRS Fresh Start Program: How Does It Work?

The IRS Fresh Start Program makes it easier for taxpayers to settle their overdue taxes without incurring further penalties. This program uses various measures to accommodate the many different cases of taxpayers who have unpaid taxes and bills.

The following are measures commonly implemented under the program.

Threshold

Taxpayers may be issued tax liens, which basically gives the government a right to claim properties if taxes or debts are unpaid for too long. The claim’s value may be set to $10,000 for taxpayers who already have tax liens but are still unable to pay their taxes.

Simplification

Taxpayers who settle their unpaid taxes and debts will be granted a “fast pass” to remove the liens and levies imposed on them. The removal process has been very sluggish in the past and has caused taxpayers to wonder why they still have sanctions even though they have already paid all unpaid dues.

With the Simplification measure, the liens and levies can now be removed in just a few weeks. Taxpayers would just have to submit the IRS Request Form 12277 and the IRS would remove these sanctions after they have settled their dues.

The Simplification measure makes it easier for taxpayers to pull their credit scores up as well, since the liens, levies, and other sanctions would no longer linger on the taxpayer’s credit reports.

Installments

The Installments measure is part of the Direct Debit Installment Agreement between a taxpayer and the Internal Revenue Service. This agreement authorizes a taxpayer’s account to be billed regularly and funds would be withdrawn from it automatically to serve as fixed payments for unpaid taxes.

Once the payments have totaled to a sufficient amount, tax liens and other sanctions may be lifted even if the taxpayer still has an outstanding balance. Aside from that, those who voluntarily request for this agreement to be in force can have the tax sanctions immediately lifted after their requests have been approved.

However, those who reneged on this agreement will have more tax sanctions imposed on them.

How To Apply For The IRS Fresh Start Program

If you are interested in applying for the IRS Fresh Start Program, here is a comprehensive guide for you to get started.

  • Collect and document all files that you can find starting from the year in question. These documentations will make it easier for your tax attorney to identify how much tax debt you owe the Internal Revenue Service.
  • Hire a tax attorney to help you better formulate your plan of action. Aside from that, this would also help you know all your possible options and the requirements you must prepare before applying for the program.
  • Send off all your documentation to the IRS.
  • Fill out needed forms from the IRS.
  • Prepare for a negotiation with an IRS agent.

Follow-through with your responsibilities and make sure that you settle your payments on time.

Other Factors To Consider

Having problems with your tax returns is a true nightmare. You may be stuck with a tax liability, have to deal with a federal tax lien, or even need to turn to an offer in compromise.

Trust us – you don’t want tax problems. Even if you have to set up a payment plan for your tax payments, it’s better than the alternatives.

Many of us can experience financial hardship, no matter what amount of tax you may owe. We recommend going with a qualified tax professional, that way you can pay back the full amount owed to the IRS – as well as get the best financial information possible for your particular financial situation.

This may mean paying back the money you owe in one lump sum, or it may mean striking up a payment agreement, which essentially means the IRS will pull from your bank account every month. Many of us can owe money (most often these are student loans), but tax debt relief, and tax law in general – is far different.

Most tax professionals offer a free consultation, to make sure you are a good fit for them (and vice versa). They can explain important tax concepts that will help you, like allowable living expenses, how small businesses may get special qualifications from the IRS, and how struggling taxpayers can make good on their outstanding tax bill (in the most efficient way possible).

Ultimately you’ll want to get the best tax preparation, and hopefully you’ll end up qualifiying for a streamlined installment agreement. It can be frightening if you get a notice of federal tax lien – but there are many tax professionals out there to help you.

The Bottom Line On The IRS Fresh Start Program

The IRS Fresh Start Program is a beneficial program for it will provide significant relief to thousands of delinquent taxpayers who are struggling to keep on track with paying their tax debts. As stated in the provisions of this program, the withdrawal of tax liens will be able to help more filers in keeping or getting a job that will allow them to pay off their balances in full.

There are other concerns as well – like state tax, OIC (offer in compromise), qualifying for a lien withdrawal, and seeing if tax abatement will apply to you specifically.

Visit the IRS website if you want to know more about the Fresh Start Program – they will always be the ultimate tax experts, and we should add an important disclaimer – we are not the IRS, so we cannot give you definitive final answers, regarding your personal tax situation.

References

  1. Chelsea, et al. “A Guide To The IRS Fresh Start Program.” Livewell, 20 Jan. 2020, livewell.com/finance/a-guide-to-the-irs-fresh-start-program/.
  2. “5 Things to Know About the IRS Fresh Start Program (BEFORE You Start the Process).” Geaux Tax Resolutions, 17 Dec. 2019, geauxtaxresolution.com/5-things-to-know-about-the-irs-fresh-start-program-before-you-start-the-process/.
  3. Alyssa Maloof Whatley. “What Is the IRS’ Fresh Start Program: 72 Month Installment Agreement?” Alyssa Maloof Whatley, 3 Sept. 2020, atltaxlawyers.com/what-is-the-irs-fresh-start-program-72-month-installment-agreement/.
  4. “Can You Use a Fresh Start? We All Can at Some Point!” OMNI TAX HELP, 22 Mar. 2020, www.omnitaxhelp.com/fresh-start/.
  5. “Could The IRS Fresh Start Program Help You?” Defense Tax Partners, 12 Oct. 2019, defensetax.com/could-the-irs-fresh-start-program-help-you/.
  6. Cussen, Mark P. “Start Over with the IRS.” Investopedia, Investopedia, 22 Oct. 2020, www.investopedia.com/articles/taxes/12/start-over-with-irs.asp.
  7. Defenders, Top Tax. What Is the IRS Fresh Start Program?, www.toptaxdefenders.com/blog/bid/186898/what-is-the-irs-fresh-start-program.
  8. “Denver Tax Attorney – Understanding the IRS Fresh Start Program.” Goldman Law Firm, 5 May 2017, denvertaxlawfirm.com/understanding-the-irs-fresh-start-program/.
  9. “Do I Qualify for the IRS Fresh Start Initiative?” Heartland Tax Solutions, 30 Apr. 2020, heartlandtaxsolutions.com/do-i-qualify-for-the-irs-fresh-start-initiative/.
  10. “Do You Qualify for the IRS Fresh Start Program?” NewPoint Law Group, 16 Oct. 2020, newpointlaw.com/qualify-irs-fresh-start-program/.
  11. Fox Tax Solutions. “IRS Fresh Start Program Qualifications.” Fox Tax Solutions, Fox Tax Solutions, 4 Dec. 2019, www.foxtaxsolutions.com/main-blog/irs-fresh-start-program-qualifications.
  12. “Fresh Start Initiative.” Tax Defense Partners, www.taxdefensepartners.com/fresh-start-initiative/.
  13. Gomez, Ozzie. “What Is the IRS Fresh Start Program?” Innovative Tax Relief, 24 June 2020, www.innovativetaxreliefllc.com/what-is-the-irs-fresh-start-program/.
  14. Grennen, James. “Need a Fresh Start? IRS Tax Debt Resolution.” Long Island Tax Resolution Services, 27 Oct. 2015, longislandtaxresolution.com/need-a-fresh-start-irs-tax-debt-resolution/.
  15. Highland Tax Resolution, highlandtaxresolution.com/irs/what-is-the-irs-fresh-start-program-and-could-you-qualify.
  16. “IRS Fresh Start – New Rule Reduces Tax Debt – Tax Champions.” Tax Champions | Tax Negotiation Services, 3 July 2017, www.taxchampions.com/irs-fresh-start-reduce-tax-debt/.
  17. “IRS Fresh Start Initiative to Allow More Consumers to Settle Tax Debt.” Optima Tax Relief, www.optimataxrelief.com/irs-fresh-start-initiative-to-allow-more-consumers-to-settle-tax-debt/.
  18. “IRS Fresh Start Initiative.” ALG Tax Solutions, 28 Dec. 2018, www.algtaxsolutions.com/services/tax-resolution-services/irs-fresh-start-initiative.
  19. “IRS Fresh Start Initiative.” Community Tax, 18 July 2020, www.communitytax.com/fresh-start-initiative/.
  20. “IRS Fresh Start Program Offers Tax Relief Options.” Bomar Law Firm, LLC, 23 Sept. 2020, www.bomarlawfirm.com/blog/2020/09/irs-fresh-start-program-offers-tax-relief-options/.
  21. “IRS Fresh Start Program to Avoid Tax Penalties and Liens.” Peoples Tax Relief, 2 Nov. 2015, www.peoplestaxrelief.com/tax-negotiation/irs-fresh-start/.
  22. “Irs Fresh Start Program.” LifeBack Tax, lifebacktax.com/irs-fresh-start-program.
  23. “IRS Fresh Start Program.” Palmer Tax Group, www.palmertaxgroup.com/irs-fresh-start-program/.
  24. “IRS Fresh Start Program: 2020 Tax Help.” Tax Group Center, 15 June 2020, www.taxgroupcenter.com/fresh-start-initiative/.
  25. “IRS Fresh Start Program: A Guide to the Fresh Start Initiative.” Squar Milner, 20 Aug. 2020, squarmilner.com/irs-fresh-start-program/.
  26. “IRS Fresh Start Program: Coast One Tax Group A Fresh Start Program.” Coast One Tax Group, coastonetaxgroup.com/tax-services/fresh-start-initiative/.
  27. “IRS Fresh Start Program: Guide to the RS Fresh Start Program 2019.” IRS.com, 20 May 2019, www.irs.com/articles/what-irs-%E2%80%98fresh-start%E2%80%99-program.
  28. “IRS Fresh Start Program: The Complete Guide.” StopIRSDebt.com, 5 Oct. 2020, www.stopirsdebt.com/irs-fresh-start-program-the-complete-guide/.
  29. “IRS Offers New Penalty Relief and Expanded Installment Agreements to Taxpayers under Expanded Fresh Start Initiative.” Northeast Financial Strategies, Inc., nfsnet.com/irs-offers-new-penalty-relief-and-expanded-installment-agreements-to-taxpayers-under-expanded-fresh-start-initiative/.
  30. LLP, Parent & Parent. “Do You Qualify for the IRS Fresh Start Program?” IRS Medic: Your Team of Tax Consultants, Advisors, Accountants and Attorneys, www.irsmedic.com/blog/2015/12/qualify-for-the-irs-fresh-start-program.html.
  31. Mike@rtaxgroup.com. “Owe Less than $50K in Taxes? The Fresh Start Program Is for You!” Reliance Tax Group, 3 Nov. 2017, rtaxgroup.com/owe-50k-less-in-tax-fresh-start-program-is-for-you/.
  32. Network, Tax Help. “Tax Relief Experts – Trust Professionals at Tax Help Network.” What Is the Fresh Start Program?, www.taxhelpnetwork.com/blog/what-is-the-fresh-start-program/.
  33. Osterland, Andrew. “Dealing with Tax Debt? 5 Tips to Set Things Right with the IRS.” CNBC, CNBC, 1 Apr. 2019, www.cnbc.com/2019/04/01/if-you-have-tax-debt-here-are-5-tips-to-set-things-right-with-the-irs.html.
  34. S., April. “IRS Fresh Start Program Initiative – Ways to Settle Back Taxes.” Mike Habib, EA, www.myirstaxrelief.com/irs-fresh-start-program-initiative-ways-to-settle-back-taxes.html.
  35. Safarian, Artour. “The 2020 IRS Fresh Start Initiative.” Fortress Tax Relief, 10 Sept. 2020, taxfortress.com/irs-fresh-start-initiative/.
  36. Services, S.H. Block Tax. “A Quick Guide to the IRS’ Fresh Start Program.” Maryland Tax Lawyer, Tax Attorney, IRS Problem Resolution, S.H. Block Tax Services, 8 Sept. 2020, www.mdtaxattorney.com/resources/a-quick-guide-to-the-irs-fresh-start-program/.
  37. Sprague, Desiree. “IRS Fresh Start Program Makes It Easier to Settle Back Taxes.” Debt.com, Debt.com, LLC, 22 Nov. 2019, www.debt.com/tax-debt/irs-fresh-start/.
  38. Taggart, Michael. “9 Qualifications for the IRS Fresh Start Program.” Tax Relief Center, 19 Aug. 2019, help.taxreliefcenter.org/fresh-start-program/.
  39. “Tax Dictionary – IRS Fresh Start.” H&R Block, 9 July 2020, www.hrblock.com/tax-center/irs/audits-and-tax-notices/tax-dictionary-irs-fresh-start/.
  40. TurboTaxLisa, /, and CPA / Ginita Wall. “Owe Money? Get a Fresh Start with the IRS Fresh Start Initiative.” The TurboTax Blog, 11 July 2019, blog.turbotax.intuit.com/tax-planning-2/owe-money-get-a-fresh-start-with-the-irs-fresh-start-initiative-11422/.
  41. “The Ultimate Guide to Understanding the IRS Fresh Start Program.” Acadia Law Group, Inc., 14 June 2019, www.acadialawgroup.com/the-ultimate-guide-understanding-irs-fresh-start-program/.
  42. “The Must Read IRS Fresh Start Program Guide & (10) Ways to Qualify!” SOLVABLE, 21 May 2020, www.solvable.com/tax-debt/irs-fresh-start/fresh-start-program/.
  43. “What Is the IRS Debt Forgiveness Program?” Tax Defense Network, 5 Aug. 2020, www.taxdefensenetwork.com/blog/what-is-the-irs-debt-forgiveness-program/.
  44. “What Is the IRS Fresh Start Program and How Does It Work?” SOLVABLE, 16 Sept. 2020, www.solvable.com/tax-debt/irs/the-irs-fresh-start-tax-relief-program-all-you-need-to-know/.
  45. “What Is The IRS Fresh Start Program? Tax Debt Help.” Silver Tax Group, 11 Nov. 2020, silvertaxgroup.com/irs-fresh-start-program/.
  46. “What Is the IRS Fresh Start Program?” Eide Bailly, www.eidebailly.com/insights/articles/2019/3/what-is-the-irs-fresh-start-initiative.
  47. “What Is The IRS Fresh Start Tax Relief Program?” Clean Slate Tax, Clean Slate Tax, cleanslatetax.com/irs-fresh-start-program/.
  48. “What Is the IRS ‘Fresh Start Initiative’?” IRS Mind, 14 Nov. 2020, www.irsmind.com/tax-debt-and-irs-collection-solutions/what-is-the-irs-fresh-start-initiative/.