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Fresh Start Initiative
The IRS Fresh Start Initiative program is aimed at taxpayers who owe to the IRS and are struggling to pay their tax debt. This is an especially designed program by the IRS without having a lien placed on a taxpayer’s home or vehicle.
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FIND OUTWhat is the Fresh Start Program?
The Fresh start initiative is not a single program rather these are guidelines for existing programs such as Offer in Compromise , Penalty Abatement, Lien Withdrawal , & Expanded Installment Agreement. This program encompasses a lot of changes which the IRS made. Under its Fresh Start initiative, the IRS raised the threshold for streamlined installment agreements from $25,000 to $50,000 in tax debt, and the maximum repayment term from five to six years. For expanded installment agreement the new IRS threshold is between $50,000 & $100,000 and the payment terms are expanded upto 84 months.
The IRS takes into consideration circumstances beyond control such as unemployment. For example if an individual has been unemployed for over 30 days IRS can waive off the penalties in addition unemployed individuals are also eligible for a six month extension .
What are the eligibility requirements?
Several factors come into play for the determination of the applicability of this program,some of them are :
- Total tax liability should be less than $50,000
- Reduction in income by 25% for self employed individuals
- For couple filing jointly the dollar limitation is $200,000
- For single filers the dollar limitation is $100,000
What are the payment options under a Fresh Start Initiative?
The IRS Fresh Start Initiative Program has been in existence for several years now & was formerly known as Fresh Start Program. Depending on the applicability of the program these options can be approved in less time while the approval for others can take upto 2 years. Fresh Start Program includes :
- Offer in Compromise
- Penalty Abatement
- Tax Lien Withdrawal
- Expanded Installment Agreement
OFFER IN COMPROMISE
Offer in compromise allows an individual or business to settle their tax debt for less than what they owe to the IRS. It can be an option for the taxpayers who cannot pay their full tax liability or doing so will create a financial hardship. It is also a viable option if the taxpayers whose assets and income are less than their full tax liability. OIC is determined by three criteria which are when there is doubt as to collectibility, doubt as to liability and there are special circumstances which affect your ability to pay your tax liability. Taxpayers who are eligible for Installment Agreement or other types of debt resolution options with the IRS generally would not qualify for the OIC.
PENALTY ABATEMENT
In limited circumstances the IRS may offer Penalty Abatement to the taxpayers who have not paid their taxes due to special hardship.The IRS may agree to penalty abatement provided the taxpayer meets certain criteria. Interest Abatement is even more limited and is rarely offered. While these programs may offer abatement of penalty and taxes remember the taxpayer still owes taxes.
TAX LIEN WITHDRAWAL
This allows the taxpayers who have entered into or to convert their installment payment to direct debit option. Once the setup of direct debit options for the installment payment is complete the taxpayer can request the IRS for the removal of tax lien.
EXPANDED INSTALLMENT AGREEMENT
Expanded Installment agreement is a payment agreement with the IRS to pay the taxes owed within an expanded time frame. This payment plan can be requested with the IRS if the taxpayer believes that they can pay their taxes in full within the expanded time frame. If the taxpayer owes between $50,000-$100,000 and can repay the debt under 84 months this can be a great option under the Fresh start program.The criteria required is the taxpayer should be current with all their filings or if the taxpayer is self employed they should be current all their estimated tax payments . If business owners have employees, they must be current on payroll tax deposits and Form 941 filings to qualify for Installment agreement.
How do I get started?
To qualify for the Fresh Start Initiative Program the first step is to make sure that the taxpayer has been current on all their tax filings . Taxpayers can follow the guidelines created by the IRS by submission of Form 9465 on irs.gov . After the enrollment in the program is complete the taxpayer should make sure they continue to file their future tax returns timely.Taxpayers can also submit on the IRS website Form 1127 which is the application for extension of time for payment of tax due to undue hardship.
If this is something which you find too complex and time consuming Allay Tax is there to assist you. Our tax experts have years of experience handling all kinds of tax resolution and our goal is to be on your corner fighting for you to get the best possible outcome. Leading life debt free is the best way to live life and we are here to help you achieve that dream. The IRS Fresh Start Initiative is a great way to streamline your finances and move ahead from the debt holding you back. Call Allay Tax today and let our tax professionals handle this for you from start to finish.
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Reach out to us for a free consultation. Our tax experts can help you determine the best service to get relief from your debt.
