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Tax Relief Expert Offers No-Cost Consultation to See if You Qualify for Fresh Start

The IRS Fresh Start Program is designed to make it easier for individuals and small businesses to pay back taxes and avoid tax liens.

Here are some key components of the fresh start program:

1. Increased Thresholds for Tax Liens

  • The IRS has raised the threshold for when a federal tax lien is filed, meaning fewer taxpayers will face liens. Under the IRS Fresh Start Program, the increased thresholds for tax liens are aimed at reducing the number of federal tax liens filed against taxpayers. 
  • Here are the details:

  • Previously, liens were often filed when the amount of unpaid taxes reached $5,000. Under the Fresh Start Program, this threshold has been increased to $10,000. This change means that fewer taxpayers with smaller tax debts will face the serious consequences associated with tax liens

  • Impact of Tax Liens: A federal tax lien is a legal claim against a taxpayer’s property when they neglect or fail to pay a tax debt. The lien protects the government’s interest in all taxpayer assets, including real estate, personal property, and financial assets. Tax liens can significantly impact a taxpayer’s credit score, making it difficult to obtain loans or other forms of credit.

  • Withdrawal of Tax Liens: The Fresh Start Program also facilitates the withdrawal of tax liens in certain cases. Taxpayers who enter into a Direct Debit Installment Agreement (DDIA) and have a tax debt below $25,000 can request the withdrawal of the NFTL. This is conditional upon the taxpayer demonstrating a history of compliance and timely payments under the agreement.

  • Taxpayers who have already paid their tax debt in full and met compliance requirements can request the IRS to withdraw a lien, rather than just release it. This removal from public records can help improve their credit score.

  • Streamlined Process: The IRS has also streamlined the process for taxpayers to enter into installment agreements, which helps prevent the filing of liens. Taxpayers with debts up to $50,000 can now apply online for a payment agreement without submitting a financial statement. For those who owe more than $25,000, a direct debit or payroll deduction is required to qualify for lien withdrawal.

    Benefits of Increased Thresholds:

  • Reduced Credit Impact: By raising the threshold, fewer taxpayers will suffer the negative impacts on their credit scores and financial standing that come with federal tax liens.

  • Encouragement to Pay Debts: The program encourages taxpayers to enter into installment agreements and resolve their tax debts without the looming threat of a lien.

  • Improved Access to Credit: With fewer liens being filed, taxpayers have better opportunities to access credit, secure loans, and manage their financial obligations.

  • Overall, the increased thresholds for tax liens under the Fresh Start Program represent a more lenient approach by the IRS, aiming to assist taxpayers in managing their debts without the immediate harsh consequences of liens. 

  • This initiative is part of a broader effort to encourage compliance and facilitate easier payment solutions.

2. Streamlined Installment Agreements

  • The program expanded access to streamlined installment agreements. Taxpayers who owe up to $50,000 can now pay through monthly direct debit installments for up to 72 months (6 years).

3. Offer in Compromise (OIC)

  • The IRS has made it easier to settle tax debt for less than the full amount owed through the Offer in Compromise program. This is available to taxpayers who can demonstrate that paying their full tax liability would create a financial hardship.

4. Penalty Relief

  • The program includes penalty relief provisions for taxpayers experiencing difficulty in paying their tax obligations due to unemployment or other hardships.

5. Adjusted Interest Rates

  • In certain cases, interest rates on unpaid taxes may be reduced, providing further relief to taxpayers under the program.

Eligibility Criteria:

To qualify for the Fresh Start Program, taxpayers generally need to:

  • File all required tax returns.
  • Have an income level that supports the financial hardship claim for an OIC.
  • Make the required estimated tax payments for the current year if you are self-employed.
  • Be current with federal tax deposits if you are a business owner with employees.

The Fresh Start Program aims to provide a more flexible approach to managing tax debt, making it less burdensome for taxpayers to comply with IRS regulations while resolving their outstanding tax issues.

If you have specific cases or clients that might benefit from this program, I can provide more detailed guidance or help with the application process.