Is a fresh start in your future? It can seem like options are few and far between once you receive a notice from the IRS. Most taxpayers simply go along with whatever repercussions and consequences stem from owing unpaid taxes because they assume the IRS won’t permit any type of relief.
But taxpayers do have IRS-approved options. The IRS Fresh Start initiative that could help you to wipe the slate clean if you qualify. Don’t write off this option if you currently owe taxes or penalties to the IRS.
What Is the IRS Fresh Start Initiative?
The Fresh Start initiative offers access to a series of options for settling unpaid taxes. The program was added to the tax code to make it possible for taxpayers to come out from under tax debt if they meet certain conditions. Fresh Start may be available to you even if you’ve failed to pay what you owe in taxes for several years.
Most taxpayers assume that the IRS won’t work with them if their tax filings aren’t current. This misconception is one of the reasons why so many taxpayers don’t utilize the approved relief options that are available from the IRS. The big thing to know is that you’re going to need to get any late returns filed and taken care of as soon as possible before you can move forward with applying for relief. The best way to do this is with the support of tax professionals.
What exactly will the Fresh Start program forgive? The big perk of participating in this program is that it may save you from the interest, penalties, tax liens, asset seizures, and wage garnishments that the IRS can use once you owe back taxes. This is significant because the penalties associated with unpaid taxes can often make it impossible for people to pay what they owe. In addition, having your paychecks, assets, or property essentially confiscated by the IRS can create financial issues that will chase you for years to come.
Getting penalties removed from your account is what’s known as penalty abatement. Receiving help with requesting penalty abatement could be one of the most significant decisions you make if you’re staring at IRS fees and penalties.
How to Qualify for the IRS Fresh Start Initiative
How can you find out if you qualify for the Fresh Start program? It’s essential to become familiar with the requirements of the program before you submit any paperwork to the IRS. Knowing the ins and outs of the program is going to increase your chances of filing an application that gets approved. Here’s some basic information to know before you take one more step:
- The IRS Fresh Start program is open to all taxpayers who owe tax debts of $50,000 or less
- All single filers must earn less than $100,000 annually to be eligible
- All married couples filing jointly must earn less than $200,000 annually to be eligible
- All self-employed individuals will need to prove that they’ve experienced a net income drop of at least 25 percent
Even taxpayers who meet the proper criteria cannot apply to the IRS Fresh Start initiative until they are fully current with all past and current tax returns. There’s no need to be discouraged if you have failed to file all past returns that are owed to the IRS, as it may be possible to submit all late returns in time to apply for relief. The IRS won’t hold the fact that you filed returns late against you when evaluating your eligibility as long as all late returns have been filed by the time you apply.
You need to make a plan for going forward if you have a history of filing late returns. The IRS will not honor your relief approval if you fail to file future returns on time. You should strongly consider having your returns filed by professional tax experts each year to avoid going backward when it comes to staying in compliance with the IRS regarding your returns. Don’t risk undoing a fresh start!
What Are the Next Steps If You Qualify for the Fresh Start Initiative?
It can feel like a new day is dawning once you discover that you will likely qualify for the IRS Fresh Start program. However, there is still a lot to cover when it comes to being on the right side of the IRS. It’s important to take the application process very seriously. In addition, knowing which portion of the IRS Fresh Start program will best fit your situation is just as important as discovering that you qualify for the program.
The IRS Fresh Start initiative actually gives taxpayers three different repayment options that provide a way to legally pay back the IRS in full without incurring any extra penalties or risking legal troubles. The first payment option is an extended Installment Agreement (IA). You will have up to six years to pay off what you owe if you owe $50,000 or less to the IRS. This option also puts a freeze on liens, asset seizures, and wage garnishments. This is the option that is used most frequently by taxpayers seeking IRS relief.
The second Fresh Start option is the Offer in Compromise (OIC). While it is possible that your situation may qualify you for the OIC, approval is actually quite rare. The OIC allows a taxpayer to make an offer to settle an IRS tax debt for less than the full amount that is owed. The IRS can and will offer a number that is substantially lower than the full outstanding total in some cases.
A third Fresh Start option is available for taxpayers who would like to pay off the full amount of owed tax using a direct repayment option. This is an option to consider if the IRS has initiated a tax lien against you. The benefit of going with this option is that you will be able to request to have a tax lien withdrawn from your account. Taking this action may prevent the lien from being reported on your credit history. However, this option is only on the table if you are in a position of being able to pay the full amount of what you owe immediately.
How can you determine which option is the right one for you? Getting tangled up in the paperwork and wording of the IRS is never an easy thing for the average taxpayer. This is why working with tax professionals to get through the application process using every channel possible can increase your chances of obtaining an IRS Fresh Start.
What Happens If Your Offer for the Fresh Start Initiative Is Accepted or Rejected?
The way that you move forward will depend on the deal that you make with the IRS. You will most likely have to submit your initial payment. The amount you pay and the method used will also depend on the specifics of your offer. Of course, you will then be responsible for paying what you owe on time during each payment period. It is very important to make sure everything is set up correctly once your offer is accepted to ensure that you don’t miss payments or overlook obligations. Utilizing the guidance of a tax professional can help ensure that you fully maximize what is being offered to you through the IRS Fresh Start program without inadvertently disqualifying yourself through the wrong action.
What if the IRS rejects your offer to be included in the Fresh Start program? You may not be fully out of options. In most cases, you will have a window of time to appeal your rejection. Act quickly, because the IRS typically only gives taxpayers 30 days after the receipt of a rejection letter to appeal a decision. This is an important period for working through the reasons why your application was rejected.
Explore Your Options for the IRS Fresh Start Program With the Experts
The Tax Group Center has helped countless taxpayers maneuver the IRS Fresh Start initiative. Our team of lawyers and experienced tax experts will work hard to help you find the right avenue for creating a manageable repayment plan. In addition to walking you through the application process, our team will make sure that you’re fully ready to apply in order to increase your odds of first-time acceptance. Reach out today to see if the IRS Fresh Start program could provide the tax relief you’re seeking.