What Is IRS Fresh Start Program?

What Is IRS Fresh Start Program?

Are you having trouble paying your taxes? The Internal Revenue Service (IRS) provides taxpayers with a way to get back on track and become compliant with their tax obligations through the Fresh Start Program. The program is designed to help those who have fallen behind on their taxes by offering them various forms of financial relief, such as penalty abatement, installment payment plans, offers in compromise, and more to make the process easier. This blog will provide an overview of what the IRS Fresh Start Program is and how it can benefit eligible taxpayers. We'll also discuss some important considerations when applying for this program so that you know what steps you may need to take if you're looking for help from the IRS.

How Does The Fresh Start Program Work? 

Suppose a taxpayer owes the IRS $15,000 due to back taxes and accrued interest/penalties, but they are unemployed with minimal disposable income for essentials such as electricity and food. In that case, it is highly unlikely that they will ever be able to pay off their debt in full.

The Fresh Start Program is designed to let taxpayers reach an agreement with the IRS by paying what they can afford. The financial standing of the individual is taken into account and serves as a central criterion that determines how much money must be paid. This way, individuals don't have to worry about being taxed more than their income allows them to.

There are four main programs available to taxpayers through the Fresh Start Program:

Installment Agreement

An installment agreement is a great way to pay off the tax debt over time, especially for those needing additional time or assistance in the payment process. Under this agreement, you can arrange to make monthly payments and set the length of time within which to pay off your debt, relieving the burden of paying all at once. With every installment, your debt gets closer and closer to being cleared. The IRS also offers reduced interest rates as another benefit when making installment payments. Be sure that you keep up with your payments so that all amendments and agreements are finalized and you can become debt free!

Offer In Compromise

The Offer in Compromise ("OIC") is a program provided by the IRS that may enable taxpayers with substantial delinquent tax liabilities to settle their debt for less than the full amount owed. The OIC process provides qualified individuals with the opportunity to obtain financial relief by reducing their overall tax liability potentially to an amount they can afford to pay. If accepted, an offer in compromise permits taxpayers who cannot fully satisfy liabilities to pay less than what they owe and move forward without fear of being subject to collection activity on outstanding balances. Engaging in the OIC process requires professional assistance; therefore, it is important for taxpayers facing significant delinquent taxes to seek help from tax professionals with experience filing this type of application.

Currently Non-Collectible Status

Non-Collectible Status is a temporary relief option available to taxpayers who owe the IRS money and cannot afford to pay it. This status suspends the collection activity of the IRS until the taxpayer's financial situation improves. A taxpayer can remain in Non-Collectible Status for up to five years and during this time, their debt will not increase due to interest or penalties. Although it can provide a break from debt collection efforts, it does not absolve taxpayers of their liability for owed taxes. Once a taxpayer is able to repay the debt, they must make payment arrangements with the IRS to reinstate full compliance. Those in need of help should contact an experienced tax professional for advice on how best to proceed with filing for Non-Collectible Status and dealing with any unpaid taxes.

Penalty Abatement

Penalty abatement can be an effective way to resolve past tax liabilities. This provision allows the IRS to forgive all or part of accrued penalties and fees due to reasonable cause, allowing taxpayers the opportunity to get on the right track with their taxes. To qualify for penalty abatement the taxpayer must present detailed records indicating a reasonable cause for their payment delinquency, including any relevant documents that explain extenuating circumstances that put them behind in payments. Typically, if a taxpayer meets all necessary requirements, they can expect to see a reduction of late payment penalties within 30-45 days from registration. Penalty abatement is a great alternative for taxpayers who are suffering from financial hardship and are looking for relief from back taxes owed to the IRS.

Eligibility For The Fresh Start Program

Eligibility For The Fresh Start Program

The IRS Fresh Start Program is an opportunity for individuals who qualify to get relief from their taxes in times of financial hardship. If a taxpayer meets certain criteria, then they can qualify to have their tax balance modified or reduced, or payment agreements extended. To be eligible, individuals must meet criteria such as having a drop in self-employment of at least 25%, being single with an income of less than $100,000, being married with an income of less than $200,000, and having a tax debt balance of less than $50,000. The Fresh Start Program provides taxpayers the potential to get on track with their taxes and not be continually struggling to make payments that are realistically out of reach.

How To Apply For The IRS Fresh Start Program

In order to qualify for the IRS Fresh Start Initiative, you must provide adequate evidence of your financial standing. The more documentation that you can supply in support of your claim the better off you will be. Evidence is key when it comes to satisfying the stringent qualifications established by the IRS—so make sure not to skip this step!

While preparing for your Form 843 filing, make sure you include relevant documentation such as medical bills, fire department reports, insurance claims, student loan statements or death certificates of family members. Additionally, a well-crafted letter that articulates your personal situation and why you are unable to pay off any tax debt is essential in convincing the IRS of your circumstance.

To qualify for the Fresh Start Program's tax relief, you must submit all unfinished or overdue tax returns and make sure your estimated taxes are up-to-date. Besides that, your current withholdings should be accurate as well. Additionally, it is mandatory to keep all filings of the previous six months valid and updated.

To ensure your request is accepted, you should contact a qualified tax relief firm. If the IRS denies you, these professionals can help compose and submit an appeal letter on your behalf.

How To Apply For The IRS Fresh Start Program

What Are The Payment Plan Options For Fresh Start Program?

The Fresh Start Program provides options for taxpayers unable to pay their taxes in full. Payment plans are available that allow you to make payments over a period of time. The IRS Direct Pay and credit card methods provide convenient ways to make payments quickly, though the credit card will incur a fee. For those needing more than 120 days to pay off their tax debt, there is an option for a long-term installment agreement with monthly payments. Payment for such contracts can be conveniently made through direct debit from your bank account, check credit/debit card, or money order. This ensures that everyone has access to the payment plan best

Tips For Successfully Participating In The Fresh Start Program

Participating in the IRS Fresh Start Program can be a useful way to get back on track with your tax obligations if you are struggling to pay your taxes. Here are some tips for successfully participating in the program:

  1. Gather necessary documentation and financial information: To apply for the Fresh Start Program, you must provide the IRS with certain documentation and financial information. This includes tax returns, pay stubs, bank statements, and any other documents that may be relevant to your application. Gathering this information will help ensure a smooth and successful application process.
  2. Work with a tax professional or IRS representative: Working with a tax professional or an IRS Tax Advocate Service representative can be helpful in navigating the Fresh Start Program and developing a payment plan that works for you. Tax professionals have expertise in tax laws and can provide valuable guidance and assistance throughout the process. Alternatively, you can work directly with the IRS by contacting them at 1-800-829-1040 or visiting their website at www.irs.gov.
  3. Stay current on tax filings and payments: It is important to stay current on your tax filings and payments while participating in the Fresh Start Program. Failing to do so may result in the termination of your payment plan and the imposition of additional penalties and fees. Be sure to follow your payment plan as agreed upon with the IRS and communicate with them if you are having difficulty making payments.

Abide by these tips to better your chances of taking part in the Fresh Start Program, which will help you become compliant with your taxes once again.

What Is IRS Fresh Start Program?
The Bottom Line:

The IRS Fresh Start Program is a government initiative designed to help individuals and small businesses who are struggling to pay their taxes. It offers a range of payment plan options, increased flexibility for small businesses to pay their taxes, and the possibility of reduced penalties and fees for qualifying taxpayers. The program also includes tax relief measures such as the expansion of the Offer in Compromise program, the introduction of the Partial Payment Installment Agreement, and the extension of the statute of limitations for collections.

If you are having difficulty paying your taxes, the Fresh Start Program may be a viable solution to help you get back on track. To be eligible for the program, you must owe less than $50,000 in total tax debt, have filed all required tax returns, and be current on all tax filings and payments. If you believe you meet the eligibility criteria, you can apply by contacting the IRS or working with a tax professional.

To conclude, the Fresh Start Program is a beneficial resource for taxpayers who are struggling to pay their taxes. If you're dealing with tax debt issues, it's worth looking into the program as an option. By undertaking the necessary steps set out in this program and collaborating with the IRS or a tax professional, you can get assistance in paying your taxes and moving forward from thereon.