IRS Fresh Start Initiative
Launched in 2011 and further expanded since, the IRS Fresh Start Initiative was designed to make it easier for taxpayers and businesses to get a “fresh start” with the IRS. Although expanded, this program initially addressed three key tax relief measures: tax liens, installment agreements and offer in compromises.
HOW THE FRESH START INITIATIVE CHANGED THINGS
Tax Liens: In the past, tax liens were filed if you owed $5,000 or more in back taxes. Now, the threshold has increased to $10,000 or more. When implemented in 2011, this reduced the tax lien filings by over 60%.
Taxpayers can also request tax lien withdrawals: 1) after the tax is paid in full, 2) the IRS’s collection statute expiration date has come, or 3) if they meet certain requirements while in a direct debit installment agreement.
Installment Agreements: Streamlined installment agreements allows taxpayers, including businesses, to set up payment plans with the IRS over a specified period of time without subjecting them to financial disclosure requirements. While in an installment agreement, the IRS will not issue wage and bank levies and will release levies currently in place, thus putting you back in control of your assets.
For individuals and families, the IRS has increased their streamlined installment agreement qualifications from $25,000 total tax debt to $100,000. However, if you owe between $25,000 and $100,000, you will be required to have your payments directly debited from your paycheck or bank account.
For businesses, there was a time when you could only get a streamlined installment payment plan if your total tax balance was $10,000 or less; now you are eligible if you owe up to $25,000.
If your total balance exceeds the qualification amounts listed above, you can pay down your balance to qualify for a streamlined installment agreement.
Offer In Compromise: An Offer In Compromise (OIC) is, in short, a proposed agreement from the taxpayer to the IRS to settle their tax debt for less than the full amount due. With the Fresh Start Program, the IRS has made it much easier for taxpayers to seek relief by only requiring a 12 to 24 month future income projection when determining their ability to pay the tax debt, opposed to 48-60 month future income projection.
Your financial obligations and ability to pay can be reduced by the amount you are paying for professional services related to representation before the IRS.
However, submitting your request for an OIC doesn’t guarantee it will be approved. Therefore, a careful analysis of your specific situation will be necessary to determine if an OIC is right for you. CLICK HERE to learn more about OIC’s.
We understand that dealing with the IRS and state tax authorities can be stressful; however, we also know the devastating effects of ignoring tax problems. Every day we work with taxpayers, just like you, to ease fears, resolve problems, and help you take advantage of what it means to have a fresh start. Some states even offer amnesty periods where they forgive all or a portion of your penalties and interest, in exchange for you paying your tax in full. Opportunities like these can save you tens of thousands of dollars, so we encourage you to take advantage of savings that so many of our clients have enjoyed.