IRS Fresh Start Program: an Overview of the Process
It’s simple. If you neglect to pay your tax debt on time, you will end up paying more money, usually in penalties and interests and the accrual of these additional fees seems to make the existing balance almost impossible to pay off.
What is the Fresh Start Program?
Typically, owing an extreme amount of debt towards the IRS can lead to wage garnishments, foreclosure, and even bankruptcy. But the Internal Revenue Service (IRS) offers taxpayers the Fresh Start program, an initiative which makes it easier for taxpayers to pay back their taxes and avoid tax liens. Below is an overview of what the Fresh Start program is and how it works.
According to the IRS website, there are three critical features of the Fresh Start program:
- Tax Liens
The IRS has recently increased the amount that taxpayers can owe before the IRS files a Notice of Federal Tax Lien. That amount is $10,000. However, there are those rare cases where the IRS may still file a lien notice if the amount is less than $10,000.
Once a taxpayer meets satisfied requires for paying off their tax debt, like paying off enough that they owe the IRS less than $10,000, the IRS can withdraw a filed Notice of Federal Tax Lien, which the taxpayer must request in writing using Form 12277, Application for Withdrawal.
If taxpayers are paying their tax debt through a Direct Debit installment agreement, some may qualify to have their lien notice withdrawn, which also requires a written request by using Form 12277. But the IRS may file a new Notice of Federal Tax Lien and resume collection actions if the taxpayer defaults on the Direct Debit Installment.
- Installment Agreement
The IRS Fresh Start program offers installment payments, which is beneficial for taxpayers who can’t afford to pay off their taxes in one lump sum. The small installments are spread out over a period of 72 months (six years) if you owe less than $50,000 in taxes. Sometimes a financial statement is required. If a taxpayer owes more than $50,000 in tax debt, they will need to provide the IRS with a financial statement.
- Offer in Compromise
An Offer in Compromise is a plan that gives taxpayers the opportunity to settle their tax debt for a lesser amount if the IRS believes that the taxpayer can pay the entire amount off. Although this may seem like the better choice, not everyone can qualify for the Offer in Compromise. The IRS looks at the taxpayer’s income and assets, among other things, to decide the taxpayer’s ability to pay.
Hire Success Tax Relief to help with your Fresh Start!
The Fresh Start Initiative might seem simple to implement on your own, but each of the three steps requires a vigorous investigation to determine whether or not you qualify for this program. Success Tax Relief can help. We are well versed in the business of tax relief and trained to solve any tax problems you may have with the IRS. Call and schedule an appointment for a free consultation. Call 877-825-1179 or contact us online today!