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How Does The Fresh Start Initiative Work?
The Fresh Start Initiative is a broader term encompassing a series of tax relief measures introduced by the IRS in 2008. This initiative aimed to provide taxpayers with a more manageable and streamlined approach to resolving their tax debts. The Fresh Start Initiative includes various programs, such as penalty abatement, installment agreements, and offers in compromise, designed to help taxpayers settle their tax obligations in a more flexible and affordable manner.
How Does The IRS Fresh Start Program Work?
The IRS Fresh Start Program is a part of the Fresh Start Initiative. Introduced in 2012, the program specifically targets individuals who are struggling to pay their tax debts in full. It offers additional relief measures and payment options, making it easier for eligible taxpayers to resolve their tax debts and get back on track with their financial lives.
Some key features of the IRS Fresh Start Program include:
- Expanded access to installment agreements, allowing more taxpayers to qualify for manageable payment plans.
- More lenient eligibility criteria for offers in compromise, enabling taxpayers to settle their tax debts for less than the full amount owed.
- Reduction or elimination of certain penalties, such as failure-to-file and failure-to-pay penalties.
- Withdrawal of tax liens after certain conditions are met, helping taxpayers to improve their credit scores.
IRS Fresh Start Program Payment Options
The IRS Fresh Start Program offers multiple payment options to help taxpayers manage their tax debts more effectively. These options provide flexibility and relief, making it easier for individuals to regain control of their financial lives and meet their tax obligations. Most common payment options include:
Installment Agreements
Offers in Compromise
Temporary Collection Hold
Penalty Abatement or Elimination
Installment Agreements
Installment agreements allow taxpayers to repay their tax debts in monthly installments, rather than a single lump sum payment. This payment option provides affordability and flexibility, enabling individuals to manage their tax debts more easily. The IRS offers several types of installment agreements, including:
- Streamlined Installment Agreements: For taxpayers with a tax debt of $50,000 or less, streamlined installment agreements offer a simplified application process and repayment terms of up to 72 months.
- Non-Streamlined Installment Agreements: For taxpayers with larger tax debts or more complex financial situations, non-streamlined installment agreements may be an option. These agreements require a more detailed financial analysis and may have longer repayment terms.
Offers in Compromise
An offer in compromise (OIC) is an agreement between the taxpayer and the IRS that allows the taxpayer to settle their tax debt for less than the full amount owed. This option is designed for individuals who cannot afford to pay their tax liabilities in full or for whom doing so would create a financial hardship. The IRS considers various factors when evaluating an OIC, such as:
- The taxpayer’s ability to pay
- Income and expenses
- Asset equity
Temporary Collection Hold
In certain cases, the IRS may grant a temporary collection hold for taxpayers experiencing financial hardship. This hold provides short-term relief by suspending collection actions, such as levies or garnishments, for a specified period. During this time, the taxpayer can work to improve their financial situation and explore other payment options under the Fresh Start Program.
Penalty Abatement or Elimination
Under the Fresh Start Program, the IRS may also consider reducing or eliminating certain penalties associated with tax debts, such as failure-to-file or failure-to-pay penalties. This can help to lower the overall amount owed and make it easier for taxpayers to resolve their tax liabilities.
How to qualify for the IRS Fresh Start Program?
Qualifying for the IRS Fresh Start Program involves meeting specific eligibility criteria based on your tax debt and financial situation. This section will outline the steps to determine your eligibility and how to apply for the program’s various options.
Evaluate your tax debt
To qualify for the Fresh Start Program, you must have a tax debt that makes it challenging for you to meet your tax obligations. This may include unpaid income taxes, penalties, and interest. Calculate the total amount you owe to the IRS to help you assess which payment options may be suitable for you.
Ensure tax compliance
Before you can qualify for the Fresh Start Program, you must be current with your tax filing obligations. Make sure you have filed all required tax returns for previous years. If you have any unfiled returns, complete and submit them before applying for the program.
Determine your eligibility for specific payment options
Each payment option under the Fresh Start Program has its own eligibility criteria:
- Installment Agreements: To qualify for a streamlined installment agreement, your tax debt must be $50,000 or less, and you must be able to repay the debt within 72 months. For non-streamlined installment agreements, eligibility criteria may vary depending on your financial situation and tax debt amount.
- Offers in Compromise: To be eligible for an OIC, you must demonstrate that you cannot afford to pay your tax debt in full or that doing so would create a financial hardship. The IRS will evaluate your ability to pay, income, expenses, and asset equity when determining your eligibility.
- Penalty Abatement or Elimination: To qualify for penalty abatement or elimination, you must have a reasonable cause for not meeting your tax obligations, such as a medical emergency, natural disaster, or other extenuating circumstances.
Gather necessary documentation
To apply for the Fresh Start Program, you will need to provide the IRS with documentation to support your eligibility. This may include:
- Financial statements detailing your income, expenses, and assets
- Tax returns from previous years
- Proof of reasonable cause for penalty abatement or elimination requests
Apply for the Fresh Start Program
Once you have determined your eligibility and gathered the necessary documentation, you can apply for the Fresh Start Program by submitting the appropriate forms to the IRS. This may involve:
- Completing and submitting Form 9465, “Installment Agreement Request,” for installment agreements
- Submitting Form 656, “Offer in Compromise,” and related financial documentation for offers in compromise
- Submitting a written request and supporting documentation for penalty abatement or elimination
Working with a tax professional like those at NationalTaxHelp.org can help you navigate the qualification and application process, ensuring that you have the best chance of success in obtaining relief through the IRS Fresh Start Program.
How To Apply For The IRS Fresh Start Program
- Gather necessary documentation: Compile all relevant financial records and tax documents, such as tax returns, W-2s, and bank statements.
- Consult with a tax professional: Reach out to NationalTaxHelp.org for a free consultation with our team of experts. We can help you determine the best course of action for your specific situation.
- Complete the required forms: With the help of a tax professional, fill out and submit the necessary forms for the Fresh Start Program. These may include Form 9465 for installment agreements or Form 656 for offers in compromise.
- Submit your application: Once all forms and documentation are complete, submit your application to the IRS. NationalTaxHelp.org can assist you throughout this process, ensuring your application is accurate and timely.
