What is the IRS Fresh Start Program
IRS Fresh Start Program helps taxpayers who owe the IRS. Under certain circumstances, taxpayers can have their federal tax debt partially forgiven. When the IRS considers forgiving tax debt, the financial situation of the taxpayer is a primary criteria. Basically, the IRS cannot collect more than a taxpayer can pay.
Taxpayers that have the financial resources to pay only a partial amount of their federal tax debt can apply for the IRS government payment plan called an Offer in Compromise (OIC) to resolve the remaining debt. Considering the financial capacity of the taxpayer, the IRS might significantly reduce the total debt to an amount that the taxpayer able to pay. The reduced tax debt amount can be paid in a lump sum or in fixed monthly installments.
There are strict qualification requirements for an OIC and not everyone who owes thousands of dollars to the IRS will qualify for the program. Refer to our “Avoid Scam” section to make sure you stay away from fraudulent companies that promise you an Offer in Compromise, without first analyzing your specific tax situation, and preparing the necessary forms for the IRS, since the IRS is the only one that can approve an OIC.
Who qualifies for the IRS Fresh Start Initiative?
In order to qualify for the IRS Fresh Start initiatives for debt settlement or lien withdrawals generally, you’ll need a couple of things at a minimum: The first is that any missing or unfiled tax returns must be filed. The other thing that is typically required is that you are current with your estimated tax payments or your current withholdings are correct, and they have been so for the last 6 months.
How to Apply for IRS Tax Debt Forgiveness Program
To make it easier for taxpayers to qualify for the Tax Debt Forgiveness Program, the IRS has expanded their Fresh Start initiative. Under IRS new flexible rules, taxpayers do not have to disclose extensive financial details to the IRS to qualify their paying ability. The Fresh Start initiative offers taxpayers the following ways to pay their tax debt:
- Tax Liens. The Fresh Start program increased the amount that taxpayers can owe before the IRS generally will file a Notice of Federal Tax Lien. That amount is now $10,000. However, in some cases, the IRS may still file a lien notice on amounts less than $10,000.
- Installment Agreements. Some taxpayers may qualify to pay their delinquent federal taxes in monthly installments if they cannot pay their tax debt in full.
- Offers in Compromise. An Offer in Compromise (OIC) is an agreement that allows taxpayers to settle their tax debt for less than the full amount that they owe. Fresh Start Initiative expanded and streamlined the OIC program. The IRS now has more flexibility when analyzing a taxpayer’s ability to pay. This makes the Offer In Compromise program available to a large group of taxpayers.