What Is The Fresh Start Program?
The IRS’s newly revised program called the “Fresh Start program” has made it easier for taxpayers to pay their unpaid tax liability. The IRS has launched this Fresh Start Program to help taxpayers get their tax liability paid in full and in most cases avoid federal tax liens from being filed. This program was first introduced in 2008, known as the IRS Fresh Start Initiative,
Program Amendment 2012
But there has been revisions made to the program since 2012 to broaden the options. When a taxpayer owes a large amount of money to the IRS, they can pay off the entire amount over the course of six years
Benefits For Small Business Owners
This program is not designed for individuals only, it can also benefit small business owners. Small business owners can set up a payment plan, with no financial release, if the balance is below $25,000 and the entire tax liability gets paid within 24 months.
How Does This Help Taxpayers?
By using the many options of the Fresh Start program, minimal financial data will be needed. This can be beneficial to a taxpayer who is a high earner. You will not be required to submit any info related to your monthly income or household living expenses if you can commit to paying the minimum required payment needed to full pay your tax bill.
There are three settlement options to the fresh start program that everyone wants to know about
Notice of Federal Tax Lien
First is the tax liens. Under normal circumstances the IRS will file a Notice of Federal Tax lien on balances that are over $5,000. With the Fresh Start program that amount has been increased. The IRS will no longer file a Notice of Federal tax lien until that amount is above $10,000. As this is a general rule, there are still certain accounts that are under $10,000 in which a lien can be filed.
When the balance is over $10,000 but under $25,000 and set up on a direct debit payment plan you will have the option to request in writing for any liens to be removed.
Being approved for a lien withdrawal may help you avoid having liens placed on your credit report. Once a lien is placed on your credit report it can be very hard for you to open a credit card or obtain any personal loans.This will not only hinder your current financial status but can also haunt you in future years.
Once a lien is placed on your credit report, it can take up to seven years to be removed.
The next most popular question among taxpayers is what will the terms of my agreement be?
The IRS Fresh Start Program expanded the options to setting up streamlined installment agreements. Individual taxpayers who owe up to $50,000.00 can make arrangements to set up a direct debit installment agreement without the need for financials. This is an increase from the $25,000 to $50,000 threshold.
This agreement must meet the terms of having the entire liability paid off in 72 months, or six years.
For Example, if you owe $40,000 to the IRS you can possibly be set up on an agreement for roughly $555 monthly payments. Furthermore, the IRS has allowed taxpayers who owe between $50,000 and $100,000 to enter into a direct debit installment agreement with no financials given. The total tax liability must be paid in full over 84 months. This new revision is called the Expanded Installment Agreement.It may seem like simple math and most of the time it is.
Collection Statue Expiration Dates
There is one factor that may cause the minimum required payment to be increased from the simple equation. This factor is the Collection Statue Expiration Dates (CSED’s). The IRS has 10 years to collect on the owed back taxes. Once a tax return is filed, the clock starts running. Generally, 10 years from the date the tax return is filed will be your CSED date. Once the 10 years has passed, the IRS can no longer attempt to collect nor expect you to pay the back taxes owed.
The final question that is common among taxpayer regarding the Fresh Start program is Do I Qualify for a tax liability settlement?
Offer in Compromise
Well recently added into the Fresh Start Program, the IRS expanded the eligibility for Offer in Compromise requests. An Offer in Compromise (OIC) will allow you to offer a reduced settlement amount. This amount is drastically lower than the total amount of your tax bill. The specific calculation is done through your ability to pay after all expenses are applied against your income. The offer amount is also determined through any equity you may have in assets.
Through the OIC program, The IRS is being more lenient when looking at a taxpayer’s financial ability to pay.By making this change, it opens the door for a larger group of taxpayers to apply. Don’t be scared to let your tax professional know all the details of your financial status in order to determine if this option is the best outcome for you.Each case is determined based on the specific financial details of your personal situation.
By utilizing the Fresh Start Program, it makes the process easier to relieve your tax problems. Tax liability is a financial burden on anyone! The programs are meant to help people avoid many downfalls when it comes to owing money to the IRS. Some of the gains are that it reduces the taxes, penalties, interest, tax liens, wage garnishments or levies from taking place on your account. With slightrelease of info to the IRS you are able to begin making monthly payments immediately. Not only are you able to qualify for an agreement quickly, it can also be within your means. Most of the times taxpayers are in a financial crisis to begin with so reaching an affordable outcome can be such a weight lifted off your shoulders!
You Need To Follow The Terms Of The Agreement
You are still obliged to follow the rules set before you from the IRS. You must first file all of your back and current federal tax returns to be eligible. If there are any missing returns on your account, you will not even be able to make a request for one of the IRS Fresh Start programs. Enrolling in the program’s options can be very complex as there are numerous rules that must be followed. To make sure that you are asking for the best resolution for your situation you may want to seek help from a qualified firm, like Omni Tax Help, who has tax experts available to assist you.
You Need The Help of A Tax Expert
Your financial data can be fully examined to make sure the program you are applying for will end with a desired result. A Tax expert can also help you avoid disclosing information to the IRS that is not otherwise needed. Based on your financial status, they can make sure that you are on track to apply for the best option, based on your needs, and follow through that it is accepted. A tax expert understands the needs of the client as well as the rules that the IRS follows. Taking advantage of the Fresh Start Program will allow you to settle your tax liability once and for all instead of getting further into liability.