How Does the IRS Fresh Start Forgiveness Program Work?

how does the irs fresh start program work?

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If you have tax debt you’re unable to pay, you may be worried that the penalties, interest charges, and other threats facing you from the IRS will rapidly spiral out of your control, leaving you in a position from which you’ll never recover. 

However, so long as you have legitimate reasons for getting behind on your taxes, there’s no need for this to be the case. 

Despite often having a reputation as the bad guy, the IRS has in fact put a number of policies in place over the past couple of decades – including payment plans, penalty relief, debt reassessment, and more – that are specifically designed to provide a lifeline to struggling taxpayers. 

Known as the IRS Fresh Start Program, it’s an initiative designed to give both individuals and small businesses the opportunity to achieve just that: a fresh start when it comes to their taxes. 

Keep reading to find out more about how the Fresh Start Program works, or give the team here at Tax Relief Helpers a call, and we can walk you through the program and explain exactly how it could help you based on your own personal circumstances. 

how does the irs fresh start program work?

What is the IRS Fresh Start Forgiveness Program?

First launched in 2011 as a response to the financial hardships brought on by the economic downturn, the Fresh Start Initiative involved a series of changes being made to IRS collection procedures and policies with the intent to help individuals and businesses pay their back taxes, avoid penalties, and ultimately resolve their tax debt.

Rather than being one singular program, the Fresh Start Program actually encompasses a number of different schemes – each offering different resolution options and suiting different sets of circumstances.

Eligible taxpayers can benefit from streamlined processes and more flexible terms, with options that include:

  • Payment installment agreements over a number of years
  • Reduction of total debt payable
  • Penalty relief 
  • Withdrawals of tax liens

Additionally, so as to allow more taxpayers to qualify for the various schemes, several changes and adjustments to thresholds and criteria were implemented. These included raising the thresholds for qualifying debt amounts, adjusting calculations to create more favorable outcomes for people experiencing extreme financial hardship, expanding the range of penalty relief options, and more.

The Fresh Start Program has enabled thousands of Americans to overcome their tax debts, regain control of their finances, and move on with their lives. And if you’re struggling with tax debt, it’s highly likely that it will enable you to do the same. 

How does the IRS Fresh Start Forgiveness Program work? 

There are four main elements that make up the IRS Fresh Start Program: 

  • Extended payment installment agreements
  • The Offer in Compromise agreement
  • Tax lien withdrawals 
  • Tax penalty relief

Extended Installment Agreements

The most common tax resolution option, extended installment agreements enable you to set up manageable monthly payments to settle your tax debt over a period of up to six years. IRS collection activities such as the seizure of assets, tax liens, and wage garnishments are also put on hold throughout the duration of the agreement. There are a range of installment plan options available, depending on each person’s individual circumstances.

Offer in Compromise (OIC)

OICs are agreements whereby the IRS allows you to settle your tax debt for less than the full amount owed. Thanks to the calculation changes made as part of the Fresh Start Initiative, more taxpayers now qualify for an Offer in Compromise. However, these agreements are still harder to get approved so if this is an option you want to explore, it’s highly recommended to work with a professional tax resolution firm such as Tax Relief Helpers to increase your chances of getting an offer accepted. 

Tax Lien Withdrawal   

This option allows you to remove a previously filed federal tax lien from your public record, which can have significant positive implications on your credit score and overall financial well-being. One of the key eligibility criteria is to first enter into a direct debit installment agreement with the IRS, allowing them to take a part of your monthly wages in order to pay off your tax debt. 

Penalty Abatement

In addition to the above options for settling your tax debts, the Fresh Start Program also includes relief from penalties, which often make up a large percentage of total tax debts owed. This relief is generally only available to people who earn a low wage or are unemployed, but if your penalty is due to failing to file or filing late, there’s a penalty abatement available so long as it’s your first time.

Who qualifies for the IRS Fresh Start Program?

The IRS Fresh Start Program is available to both individuals and small businesses.

Broadly speaking, the qualifying criteria are as follows:

  • Tax debt: you have an outstanding tax liability with the IRS, which can include unpaid taxes, interest, and penalties. 
  • Inability to pay: you must be able to prove that you are unable to pay your tax debt in full – this can be due to factors such as financial hardship, insufficient income, or significant expenses. 
  • Previous filing compliance: you must have no missing, incomplete, or unfiled tax returns. 
  • No bankruptcy petitions: you can’t have an open bankruptcy petition. 
  • Commitment to pay and file: you must commit to making timely and consistent payments for any installment agreements that are approved, and filing all future returns on time.

However, in addition to the above, each of the schemes within the Fresh Start Program also has its own specific qualification and eligibility criteria. These include factors such as the amount of tax debt you owe, your total earnings as an individual or profit as a business, your previous filing and payments history, other factors that may have influenced your ability to pay your taxes, and so on. 

As a result, understanding your options and what you are eligible for can be very confusing. It’s also important to remember that criteria can change, and finding accurate up-to-date information can sometimes be challenging.

For this reason, we’d always recommend speaking with a tax professional who can advise you on the exact options available to you at the time, and based on your specific individual circumstances. At Tax Relief Helpers, our seasoned experts are able to talk you through all your options, recommend the best way to proceed, and better still – handle the entire process with the IRS on your behalf, both taking the stress off your plate and ensuring you’ll achieve the optimal solution to your tax worries.

How to apply for the IRS Fresh Start Program

While the IRS has a wide range of resources to help you navigate the process of applying for the various schemes that fall under its Fresh Start Program, there is no single resource on the IRS website that summarizes all the different options available. This means it can be a confusing and time-consuming process to do alone. 

Tax Relief Helpers has a team of tax experts with decades of experience in helping people resolve their tax burdens, so we’ll be able to walk you through all your options, as well as negotiate with the IRS on your behalf in order to achieve the best possible outcome, making the entire process much easier, faster, and increasing your chances of success. If you’d like to find out more about how the IRS Fresh Start Program works and if it could resolve your tax debt worries, contact us today for a free, no-obligation consultation

If you would prefer to apply for the program directly with the IRS however, here are the steps you’ll need to follow:

  1. Ensure all your back and current tax returns are correctly filed (if not, you’ll be ineligible)
  2. Assess your eligibility for the different tax relief options available
  3. Gather all necessary documentation
  4. Submit your application using the appropriate form
  5. Follow all instructions provided by the IRS
  6. Pay any required fees
  7. Stay alert to all communications from the IRS and provide all updates or additional information requested

​​Find out how the IRS Fresh Start Program can help with your Tax problems

The IRS Fresh Start Program is the lifeline many people need to get back on their feet financially when they find themselves with spiraling tax debt. But navigating the process alone can be complicated and stressful, and may result in you not achieving the outcome you’d hoped for. 

Let Tax Relief Helpers take this burden off your shoulders. We’ll provide you with comprehensive explanations of all your options, negotiate the settlements on your behalf, and save you a considerable amount of time, money, and stress.

If you want to find out how the IRS Fresh Start Initiative can help you resolve your tax debt, give us a call today. 

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