The IRS created the Fresh Start Program, sometimes referred to as the Fresh Start Initiative, to help taxpayers pay off their tax debt and avoid penalties or liens. The program was started as a way for debts to be paid while lessening the burden on individuals and business to qualify for some of the repayment programs. Many, but not all, may qualify for these options – review each and see if they may be a viable option for you or your business. If you are unsure or wish to follow through with one of these programs, contact us today for assistance.

 

Tax Lien Withdrawal:

The Fresh Start Program increased the amount of debt that had to be owed to the IRS to $10,000 before a lien can be placed. Only in certain circumstances can a lien be placed on a debt under $10,000. The Initiative now allows for the withdrawal of a lien with Form 12277 if a taxpayer meets certain requirements while repaying the debt, like making payments to their debt with a direct debit installment agreement. Should an individual or business default on payments after the lien is lifted, the IRS is able to resume collection actions including issuing a new Notice of Federal Tax Lien for the same debt.

 

Offers In Compromise:

An Offer in Compromise is when a tax debt is settled for less than the original amount. The Fresh Start program broadened the availability to this option to a larger group of taxpayers; more people can qualify for this option now than those who could before the Fresh Start Program. A taxpayer must submit an offer explaining the unmanageable hardship that they would experience if they had to pay the debt in full or in monthly installments. In most cases, the IRS will agree to the Offer in Compromise if they feel that the amount is the most that they will get from the taxpayer. If they find that the taxpayer could pay off their debt in full, whether as a lump sum or in monthly installments, then they will not approve the Offer in Compromise.

 

Installment Agreement:

This repayment option allows the taxpayer to make monthly payments towards their debt. The Fresh Start Program expanded access to this option as well. Now, more than ever, more people can qualify for this option. With the Fresh Start Program, debts up to $50,000 can be paid off with direct debit payments over the course of six years, or 72 monthly payments. This is one of the easier to apply options with its online application process. Those who wish to apply or see if they qualify for this option can log onto IRS.gov and use the Online Payment Agreement tool. Paper applications are still accepted – you will need to complete and file form Form 9465:”Installment Agreement”.