You may have heard about the IRS Fresh Start Program. It sounds like a major relief initiative that helps taxpayers avoid tax debt. But what you may not have heard is that this isn’t really one special program.
While the IRS previously used this language to promote its tax relief options, many companies today take advantage of it. They release deceptive ads claiming to offer full tax debt relief through the Fresh Start Program, which sounds like a limited-time offer for taxpayers.
Unfortunately, there is no one program like this you can apply to, though the IRS still offers several options if you can’t cover your tax bill. Understanding this misleading language can help you avoid scammers or unreliable companies.
So, what’s the Fresh Start Program all about, and why do you still hear about it? Is it real or not? This guide debunks common myths and lays out everything else you need to know to find tax relief.
Is There a Real IRS Fresh Start Program?
The IRS started using the “Fresh Start” language back in 2011. But instead of one program, the terminology referred to their existing tax relief processes, like applying for a payment plan or an offer in compromise. Even then, there was no standalone program you could apply for and be accepted into.
Fresh Start represents the collection of tax resolution options that are now standard practice within the IRS, and the agency no longer uses that term.
However, today, the term is still rampant in the tax industry. Some companies that refer to this program may be legitimate, but some use it intentionally to be misleading. They may try to make you feel like this is a special offer you must act upon quickly. They may make you believe they’re the only ones who can help you with it. The truth is they cannot give you any kind of exclusive access to tax relief options, and there is no special program available.
Misconceptions About the IRS Fresh Start Program, Debunked
This may all sound confusing. The IRS does offer tax resolution to taxpayers who qualify. Yet, the Fresh Start language makes it sound like you can apply for debt relief through a special program called the Fresh Start Program and get your tax bill lowered or eliminated. That’s just not the case.
What language will you run into with tax resolution companies or scammers? Take a look at these common misconceptions debunked:
Misconception 1: The Fresh Start Program Is Something You Can Apply For
This is probably the most common myth out there. It makes it sound like you can gather your financials, submit your information to the IRS, and get accepted into their tax debt relief program. Watch out for this phrasing.
In actuality, you can apply for specific tax resolution options, such as an offer in compromise, that you qualify for. These options will help you pay off debt over time or get approval for another kind of relief.
Misconception 2: All Taxpayers Are Eligible for the Fresh Start Program
The IRS lays out specific eligibility requirements for each of its tax relief options. For example, you have to be under a certain tax debt limit to apply online for an installment agreement, or you have to show financial hardship to request a temporary pause on collections.
Some companies make it seem like you’re missing out on your chance for tax relief just by failing to apply. The truth is that many taxpayers don’t qualify for certain tax resolution options offered.
Misconception 3: You Have Limited Time to Apply for Tax Relief
Since the IRS introduced its tax resolution options, they’ve stayed a part of regular procedure. They are not limited-time offers. They are ongoing, and you can request assistance in the years you qualify.
Don’t fall for language or scams that urge you to act fast. That’s just not how it works, even while you need to act as soon as you can to avoid additional penalties and interest.
Misconception 4: The Fresh Start Program Eliminates All Tax Debt
Another myth is that Fresh Start will erase all your tax debt. The fact is that most taxpayers will not have their debt wiped out by negotiating with the IRS.
There are a couple of ways you could reduce your debt: an offer in compromise, requesting removal of penalties, or a partial payment installment agreement (PPIA). When you’re not able to cover your full tax debt, the IRS may grant you one of these options to lower what you pay. However, not all taxpayers get approved or will qualify for these requests.
Misconception 5: The Fresh Start Program Is New
Part of those limited-time offers you hear about is the idea that Fresh Start is a brand-new initiative from the IRS. Tax resolution has been around for a while now. The IRS allows these types of requests as a normal part of doing business each year to help taxpayers avoid building up a lot of debt.
Be wary of any company that’s trying to tell you about the “new” Fresh Start Program. They are probably just trying to get your attention.
Misconception 6: The Fresh Start Program Is a One-Size-Fits-All-Solution
The real tax relief options from the IRS apply to many different taxpayers and financial situations. There isn’t one program or place to turn to get the same type of resolution as another person.
You may not qualify for currently not collectible (CNC) status, for example, but you could apply for a payment plan to pay off your balance over time. The route you choose will depend on factors like:
- Your income level
- Your history of tax compliance
- Your tax balance
- Your current financial situation
The IRS doesn’t offer a one-size-fits-all cure for tax problems.
Misleading Fresh Start Language to Watch For
We’ve touched on the fact that tax resolution companies or even fraudsters use Fresh Start language as a misleading sales tactic. Let’s quickly look at a full list of examples to watch out for when you’re seeking tax debt resolution assistance:
- “Act now or miss your chance to apply to the Fresh Start Program.”
- “Learn about the IRS’ new, limited-time Fresh Start Program to reduce debt.”
- “Get exclusive access to the Fresh Start Program by working with us.”
- “Have your tax debt wiped out now with the Fresh Start Program.”
Some language isn’t entirely false. For example, if a company advertises that you can settle your debt for less with the IRS, you could potentially qualify for an offer in compromise to make that happen. However, this isn’t always the case, and all offers don’t get approved.
Always vet the companies and tax advisors you work with. Only hire reputable companies who are upfront about your options and don’t try to reel you in with misleading marketing tactics.
What Real Tax Resolution Options Are Available?
Now that you know what to watch out for, what options do you have? These are the primary tax resolution options to consider, which were once part of the Fresh Start umbrella term the IRS first introduced:
Installment Agreements
Payment plans, or installment agreements, are common. If you can’t pay your full bill when the tax is owed, you can request a payment plan to pay it off over time. You can apply online for a long-term payment plan if you owe $50,000 or less and have filed your returns. You can apply online for a short-term plan (180 days or less) if you owe less than $100,000. If you owe more than those amounts or need longer to pay, you may still be able to get a payment plan, but you will have to apply through the mail or over the phone, and you may have to provide financial details with Form 433-F or a similar form.
These agreements are solid options if you know you can pay off your debt over a few months instead of in one lump sum. You can usually apply online and get approved in just a few steps.
A partial payment installment agreement (PPIA) is a type of installment agreement that you could have if you can’t pay your bill in full within the remaining time of your agreement period. This period is the Collection Statute Expiration Date, 10 years after your tax assessment. With a PPIA, you continue to pay your agreed-upon monthly amount until those 10 years are up. The IRS won’t try to collect after that.
Offers in Compromise
This is the option for you to settle your debt for less than you originally owed. If you’re having trouble paying your balance or doing so would create a financial hardship, the IRS may approve your offer in compromise request. The agency examines:
- Your income
- Your ability to pay your balance
- Your expenses
- Your asset equity
You will offer an amount that you can pay alongside your financial information on Form 433 and Form 656. The nonrefundable application fee is $205 but may be waived if your income is lower than a certain level. The IRS will send you a letter notifying you that they either accepted or rejected your offer.
Currently Not Collectible Status
CNC status may apply to your situation. With this form of relief, the IRS agrees to temporarily suspend collections on your account. You will have to inform them of your financial hardship, and they may ask for documentation to support your claim with Form 433, Collection Information Statement.
Note that this pause on collections is only temporary. Once you’re in a better financial state, you’ll have to begin paying your balance.
Penalty Abatement
The IRS offers relief from a penalty through an administrative waiver. The most common is first-time penalty abatement, or First Time Abate, as the IRS calls it.
You can apply for abatement for failure to file, failure to pay, or failure to deposit penalties. You must have a history of good tax compliance, which is defined as filing your tax return and not receiving any penalties over the last three years.
Penalty abatement can help you reduce or eliminate penalties you’re hit with if you make a mistake or miss a deadline.
Tax Lien Withdrawal
This form of relief comes later in the process after the IRS has made collections efforts and filed a federal tax lien on your assets. You could apply for lien subordination, which ensures that any other creditors you have are first in line for repayment before the IRS.
The other option is lien withdrawal, where the public Notice of Federal Tax Lien is removed so it’s not on your public record.
Tips for Finding Legitimate Tax Relief Services
To move forward with any of these tax resolution options, you need the help of a tax professional. But it’s hard to know if a person or company is legitimate. Where do you start? Here are a few tips:
- Vet companies thoroughly, read reviews, and look through their online content.
- Don’t fall for language that claims you need to act now.
- Look for Fresh Start Program verbiage to make sure it’s not misleading.
- Avoid scams by never giving out your personal information to unsolicited requests.
- Verify that a company or person has the necessary licenses and certifications.
- Avoid claims that all your tax debt can be wiped out if you work with them.
Your best bet is to work with only experienced tax attorneys. They will ensure you understand all your options and explain tax law to you. Work with someone who genuinely wants to help you.
Find Trusted Tax Resolution Assistance at Wiggam Law
In sum, any language about the Fresh Start Program is bound to be misleading. It’s not a limited-time offering. You can’t apply for one magical program. Not all taxpayers qualify, and most people don’t get all their tax debt forgiven.
The IRS used the Fresh Start language in 2011, but it really just represents the agency’s set of options to help you pay off your debt or come to an agreement with the IRS. Whatever your tax problem may be, getting professional help is your best way to find the best way forward. Work with a reputable organization to explore your options.
Wiggam Law is your trusted partner in tax resolution. Our tax attorneys will help you understand how to resolve your tax issue and get in good standing with the IRS. We’re committed to personalized services so you get the outcome you’re looking for.
Call us at (404) 233-9800 or fill out our online consultation form to schedule a meeting with one of our tax attorneys today to find out more about our tax solutions.