Thousands of Americans just like you deal with tax problems every day. All it takes is one little mistake, one deadline missed, one unexpected event or upset in your life, and the next thing you know, you’ve found yourself up to your neck in intimidating letters from the IRS. The burden keeps getting heavier, the penalties keep stacking higher, and it can feel like there is no escape.
But there is an escape. There are ways to lessen your tax burden and regain peace of mind. The IRS runs the “Fresh Start Program” to help struggling Americans put their tax burdens behind them.
What is the Fresh Start Program? Who qualifies for the program? How easy is it to apply, and how much can you reduce your tax burden? We’re here to answer all your questions about the IRS Fresh Start Program and help you reach a clean slate so you can take back your life from your tax problems.
Is there really an IRS Fresh Start Program?
If you’ve only just heard of it, the idea of the IRS Fresh Start Program probably sounds too good to be true. While most things that sound too good to be true are too good to be true, the Fresh Start program is indeed legitimate, and it can help you.
Started by the IRS in 2011, the Fresh Start Program is a federal program to help struggling taxpayers like you considerably reduce the crushing weight of your tax problems so you can get your life back on track. The Fresh Start Program initially consolidated several programs to streamline the tax collection process and make it easier to make payment arrangements for unpaid taxes.
However, over the past decade, the IRS Fresh Start Program has expanded so that more taxpayers can put their tax woes behind them.
How does the IRS Fresh Start Program work?
So, how does the IRS Fresh Start Program help taxpayers shrink the burden of their delinquent taxes from something that seems impossible to get rid of to something manageable?
The Fresh Start Program includes several major provisions:
- The IRS doesn’t file a Notice of Federal Tax Lien until you owe $10,000 or more in back taxes.
- In some situations, you can enter into a long-term installment plan to have the IRS withdraw their tax lien, so you don’t have to worry about your property being seized.
- Tax liens are removed from credit reports by all three major credit bureaus. This way, your credit score is less negatively affected, and you can get more favorable terms for mortgages, credit cards, auto loans, or insurance.
- You can pay your delinquent taxes in regular installments, just like how you might pay for goods and services through an installment plan.
- In certain cases, you can make enough installment-based payments on time and your entire tax burden will be lifted, even if you haven’t paid the entire balance in full.
- Before the IRS Fresh Start Program, businesses with over $10,000 in tax debt could not set up installment plans without making a detailed financial disclosure to the IRS first. Now, businesses can set up installment plans if their tax debt is under $25,000 without doing so.
- Likewise, individuals can set up an installment plan without making a financial disclosure if they have up to $50,000 in back taxes and no means to pay the full amount—double the previous threshold.
The IRS Fresh Start Program makes it easier for responsible taxpayers who have fallen behind on payments to, as the name implies, get rid of their tax debt and get back on track. Essentially, the program’s goal is to give you more time to pay your tax debts and reduce its burden on your finances.
The cornerstones of the collection of policies and programs that comprise the IRS Fresh Start Program are extended installment-based payments, the Offer in Compromise, and tax lien relief.
- Extended installment-based payments, as discussed above, divide up your tax debt into easily manageable chunks that you can pay off at regular intervals over up to six years.
- As the name might imply, the Offer in Compromise is about meeting the IRS halfway when it comes to paying your back taxes. When your tax burden is too large to pay it off in full, you can propose a lower offer amount to the IRS that you can realistically pay. You can pay this proposed amount in one lump sum or several smaller installments. The rest of your tax burden is erased if you successfully pay the proposed lower amount.
- Tax lien relief allows you to enter a Direct Deposit Installment Agreement to withdraw a Notice of Federal Tax Lien. This sixty-month installment plan prevents the IRS from seizing your property to satisfy your tax debt if you owe less than $50,000.
How much will the IRS usually settle for?
The Offer in Compromise route reduces the overall amount of your tax debt. In order to reduce your tax debt, the IRS has to agree that the amount you suggest is truly the most you can realistically and reasonably pay. They will conduct an exhaustive review of your financial situation, including assessing your ability to pay, income, expenses, and asset equity, and then decide whether or not to approve your application.
As you can see, when you use the IRS Fresh Start Program, the amount the IRS will settle for varies from applicant to applicant and depends entirely on your unique financial situation.
Who qualifies for the IRS Fresh Start Program?
The Fresh Start Program is intended for individuals and small businesses with income tax liability only. In other words, the provisions only affect delinquent income tax, not gift, estate, or employment taxes.
Generally, just about any individual with an income tax debt under $50,000 or any business with an income tax debt under $25,000 qualifies for the IRS Fresh Start Program.
Over the years, the IRS Fresh Start Program has received several updates on its terms. The IRS regularly adjusts factors such as eligibility thresholds to reflect economic realities, including inflation, to help make the program accessible to the taxpayers who need it the most.
There are three specific programs you can apply for to take advantage of the IRS Fresh Start Program:
- The Streamlined Installment Agreement – Pay your tax debt in full over up to six years without incurring additional penalties or interest or worrying about tax liens.
- The Offer in Compromise – Settle your tax debt for less than what you owe.
- Tax Lien Relief – When you enter into a streamlined installment agreement, you can request that the IRS withdraw a Notice of Federal Tax Lien.
If you qualify for any of these three options, you qualify for the IRS Fresh Start Program.
You must also be current on your tax filings and payments to be eligible.
How to Apply to the IRS Fresh Start Program
Applying for the IRS Fresh Start Program is a complicated process. The chances of your application being approved depend on successfully navigating the red tape that surrounds the IRS and providing sufficient documentation to justify your application. As you can imagine, this can be extremely difficult and sometimes emotionally taxing. Instead, it’s best to have tax experts on your side to guide you through the Fresh Start Program application process and take care of the heavy lifting for you.
Can I apply to the IRS Fresh Start Program myself?
You can apply to the IRS Fresh Start Program all by yourself. The IRS provides all the instructions on filling out and submitting the forms required for a Streamlined Installment Agreement, Offer in Compromise, or Direct Deposit Installment Agreement on their website: irs.gov.
However, dealing with the IRS by yourself is not recommended because it drastically lowers your chances of being approved. For an Offer in Compromise, for example, 40% of all applications submitted by individuals on their own are rejected.
On the other hand, applicants who get help from tax relief attorneys have 90% or higher acceptance rates! When you go to tax experts such as the team of experienced tax attorneys at Wiggam Law, you’re calling on people with years of experience who can handle the heavy lifting for you. We help you by assessing your eligibility, gathering documentation to argue your case, and dealing with the IRS on your behalf. Tax specialists save you time, money, and a lot of stress!
At Wiggam Law, tax law is all we do, and we’re dedicated to getting you out of the mess so you can move on. Our tax experts take your problems and make them our problems so you can sleep at night. We treat you like family and know how to negotiate with the IRS so you don’t have to.
Ready to get a fresh start on your taxes and your life? Reach out to us to schedule a consultation, and we’ll work with you to explore your best options for tax relief and help you regain your peace of mind: