The IRS frequently earns “bad guy” status in the eyes of the public, but it does provide a path to a fresh start if you’ve hit some bumps. What’s more, you can and should take advantage of this option once you gain access to the tools and guidance you need to move forward. If you’re struggling to pay what you owe, take a look at the IRS Fresh Start initiative.
What Is the IRS Fresh Start Initiative?
The IRS Fresh Start initiative is a program that can help you avoid falling deep into debt to pay off owed taxes. Keep in mind that the Fresh Start initiative is not necessarily a single program that offers a one-sized solution; rather, it’s a collection of options that have been added to the tax code to aid taxpayers who are drowning in owed taxes and penalties. This means a fresh start could be an option for you even if you haven’t paid taxes in years.
How Does the Fresh Start Initiative Work?
The IRS Fresh Start initiative works by providing taxpayers with options for paying overwhelming tax debt without falling further into the debt hole. Many of the worst repercussions of not paying the IRS on time can be taken off the table once you fill out an application. The Fresh Start initiative can put you on the same side as the IRS instead of trying to hide from them.
Having a “fresh start” payment plan approved can take anywhere from one to 12 months, and the IRS can nullify its agreement with you at any point if you fail to make promised payments. Keep in mind that changes to the tax code may impact your agreement with the IRS in the future. These are just some of the reasons why having a tax representative helping you along the way is so critical to successfully utilizing the IRS Fresh Start initiative.
Who Qualifies for the Fresh Start Initiative?
Anyone who owes a tax debt of $50,000 or less could be qualified to participate in the Fresh Start program. Self-employed individuals need to show that they’ve seen their net income drop by at least 25 percent to qualify for this program. Single filers need to earn less than $100,000 per year to qualify. A married couple filing jointly needs to earn less than $200,000 annually to qualify. Here’s what else you need to know:
- You must first file all back and current tax returns before applying
- Repayment options cannot be requested if you have yet to file outstanding returns
- You must be willing to file future returns on time in order to retain your status
It is a smart idea to have a tax professional look over your situation and provide assistance before you begin filling out forms, as determining your qualifications can be a complex process. What’s more, you want to make sure that you sign up for the type of forgiveness or repayment plan offered through Fresh Start that serves your interests.
Can You Negotiate IRS Debt?
It is often possible to negotiate IRS debt if you fall into a qualifying category. The Fresh Start program was designed precisely to allow this for certain taxpayers. However, you still have other options if you cannot negotiate down the amount of debt you owe. The IRS may still grant you an option for repaying the full amount owed overtime. Entering into a plan with the IRS can also shield you from harsh penalties.
What Are the Fresh Start Repayment Options?
People who participate in the program can choose one of three repayment options. The most common option is an extended installment agreement. This setup grants you up to six years to pay off taxes that are owed without incurring any penalties or interest. You will also be protected from IRS actions like liens, asset seizures, and wage garnishments. The IRS will determine the size of your payments each month based on the income and assets you have at your disposal. Monthly payment amounts are designed to be reasonable and realistic. Both long-term and short-term payment options are available. This is often the most desirable arrangement.
A second option is called an Offer in Compromise (OIC). An OIC makes it possible for you to make an offer to settle the tax debt that you owe to the IRS for less than you owe. The offer can often be substantially lower than your actual tax debt. However, there is an art to making a reasonable offer that is likely to be accepted by the IRS.
The last option is something called a tax lien withdrawal. This repayment option requires you to pay off your full debt total using direct payments. You will need to draw up a plan to have the tax lien taken from your account each month.
Do You Want to Learn More About the IRS Fresh Start Program?
The IRS Fresh Start initiative is not simple; in fact, trying to work through such a nuanced program on your own could cause you to miss opportunities or make less than ideal decisions. Tax Group Center’s team of licensed, caring tax professionals will work to ensure that you can squeeze the full potential out of what is offered from this program. We’ll go through all of the steps and options that are involved on a one-on-one basis.
It’s not every day that the IRS volunteers to help people with tax debt. Don’t miss your shot to clear up a big problem! We can also help you with filing your taxes on time to ensure that your acceptance into the program is never nullified. Reach out today to explore this option with an industry-leading team backed by 30 years of experience.