What is the IRS Fresh Start program?
You’ve worked hard, but for many reasons, you might not be able to pay your tax debt on time. You may also feel unsure about what to do next. Introducing the IRS Fresh Start program.
Owing the IRS for back taxes is a nightmare you never thought you would take part in.
Yet, here it is. The penalties are accumulating, and the threatening letters have arrived.
You’re not alone. The IRS collects millions from taxpayers in penalties for failure to pay.
Many taxpayers are unaware that the IRS has programs to help them get back on track.
Curious about the IRS Fresh Start Program initiative ?
In 2008, The United States experienced a housing crash and the fresh start program IRS was born.
Even before the official announcement of a financial crash, many homeowners faced rising interest rates on their mortgages. They found themselves in financial trouble.
The IRS Fresh Start Program began in 2008. It aims to help citizens who have trouble paying their taxes.
The IRS Fresh Start Program was expanded in 2012. It aimed to help the unemployed and businesses recovering from the housing crash.
The Fresh Start program from the IRS gives individuals and businesses options to pay back taxes over time. Each option has specific rules and requirements. You must meet these to join the tax relief program.
URGENT: Get Virtual Tax Relief. Enjoy the convenience of handling your taxes from home with a friendly touch!
Ways to Settle Back Taxes with IRS Fresh Start program
Extended IRS Payment Plan
This is a repayment agreement that allows you to pay off your tax debt in monthly payments.
It is designed for people who owe $50,000 or less in taxes. With an extended installment plan, taxpayers have up to 6 years to make payments until the balance is paid in full.
The amount of monthly payment will depend on the total back taxes and accrued interest.
You will need to file financial disclosures. This will help determine an affordable monthly payment for your situation.
Businesses that owe less than $25,000 in taxes, interest, and penalties can apply for a special payment plan. This plan is called the In Business Express Installment Agreement.
There are filing fees for this type of repayment plan.
You may have options to negotiate penalty payments and halt tax liens.
Short Term Streamlined IRS Payment Plan
If you owe back taxes and can pay them in less than 6 years, you can join a direct debit plan. This plan lasts for up to 180 days.
Businesses that owe between $10,000 and $24,999 are enrolled in a short-term Direct Debit Installment plan. You must have employees to be eligible.
Setting up monthly payments to be directly deposited with the IRS from your bank can help you stay on track. This will also help you avoid defaulting on your repayment plan. There are also reductions in fees and penalties by entering into a short-term direct debit plan.
Offer In Compromise (OIC)
There are situations in which a taxpayer may not be able to pay the full amount owed within 6 years. There is no limitation on the amount of tax owed to apply.
An OIC agreement is complicated and requires extensive filings and documentation to prove that your financial hardship is so severe that full repayment in full is not possible.
In this case, the taxpayer fills out application forms with financial documentation. In the application, an offer is made. This is your offer of what you can pay when filing for a reduction in the total tax debt owed.
Uncollectable Status
Through filings for tax debt relief, it may be determined that your tax debt is uncollectible at this time.
This is a tough situation. You may be unemployed and have no money. You could be facing a serious illness with high medical bills. You might also be struggling to meet your basic needs. In this case, you cannot pay your tax debt.
If your tax debt is filed as an uncollectible status, that does not mean that the debt is forgiven.
Once you are earning income again and/or acquiring assets, you will be expected to pay your back taxes. Then, you may be able to negotiate with the IRS on repayment plans.
How Can You Qualify for Tax Relief?
Before you can begin to apply for payment plans or an OIC through the IRS Fresh Start Program, you must be in compliance. The following outlines your steps to qualify for tax relief.
- Owe Less Than $50,000
To qualify for a repayment plan under the guidelines of The IRS Fresh Start Program, your tax debt must be under $50,000. This does not include an OIC. An Offer In Compromise can be submitted for any tax amount.
Businesses are also eligible to apply if they owe less than $25,000 and are able to meet monthly payments. The business must have employees.
- First Time Delinquent Tax Payer
In order to receive some of the benefits given under repayment agreements, you must not be a repeat offender. This means opportunities to apply for removal of Federal Tax Liens and penalties will not be given.
- Tax Filings Are Up To Date
This means that all of the years that have not been filed must now be up to date regardless of your ability to pay. The IRS will not accept an application for The Fresh Start Program until all filings are complete and accurate.
- Maintain Compliance For 5 Years
If you are approved for an installment plan or OIC, you must continue to pay your taxes on time for the next 5 years.
If you do not pay on time within 5 years, the IRS can declare you out of compliance. They can also reinstate the full amount you owed before. This includes the full-back tax, penalties, and interest.
Get Tax Relief Now
Get Expert Advice For Applying to the IRS Fresh Start Program
Filing your taxes late or not being able to pay your full tax bill on time happens to many Americans. It is a stressful problem because of legal terminology that most of us cannot figure out on our own.
This article has explained some repayment options you might qualify for with the IRS Fresh Start Program. There are both immediate and long-term requirements that must be met to qualify.
Keith L. Jones, CPA, specializes in IRS tax debt relief, tax resolution, and back tax filing. There is a no-cost obligation with your consultation.
Get your financial freedom back. Gather your tax documents and any IRS notices and make an appointment today.
Why Should You Consult With a Professional Tax Service?
You owe back taxes, and you have not resolved the amount owed. This makes it hard for you to comply with the IRS. This is a serious problem.
It may make you feel that you are in over your head. In truth, you are.
Collecting all the documents you need to file past years’ returns will take time and effort. You must follow the rules for late filing fees and find the right forms to submit.
What happens if you submit forms incorrectly? Have you had tax notices reviewed to see if they are accurate? What if you enter into an agreement and do not fully understand the requirements and then default?
An experienced professional can help you negotiate your tax debt with the IRS. They know how to use tax relief programs effectively.
Knowing the law and your rights under tax relief is important to avoid future problems.
A qualified CPA can assist you with financial planning that keeps you on track. They can also help you with further negotiations if you fail to meet deadlines in your repayment agreement.