Paying taxes to the Internal Revenue Service (IRS) may be challenging when facing financial problems. Unfortunately, failing to remit can lead to the accumulation of debt and fines. If you owe the IRS, you may be wondering if any tax relief programs can help you repay and avoid further consequences.
One initiative that has been effective in helping people deal with accrued taxes is the Fresh Start program. If you qualify for this initiative, you can avoid penalties, fines, high-interest rates, and the IRS withholding your salary.
Here, we discuss five essential things you should know about this program before applying. We will also explain how to identify if you qualify and discuss the measures you should take to maintain eligibility.
1. It Offers Extended Installment Agreement
The IRS Fresh Start program offers fixed installment schedules to taxpayers who owe less than $50,000. Using this initiative, you get a maximum of six years to repay the entire amount. Besides that, the IRS will not charge you any penalties as long as you pay using the provided schedule.
They will also refrain from engaging in collection activities such as freezing your assets or holding your wage. When you qualify for an extended installment agreement, you will avoid the debt from building up and get enough time to repay.
2. You Can Opt for Offer in Compromise
If you have standing assets that you can use to clear some portion of your debt, you may apply for an Offer in Compromise (OIC). This program will allow you to repay an amount that is significantly less than what you owe. However, you must deposit an amount equal to 20% of your total debt as you submit your application.
As the IRS considers your offers, you must continue remitting monthly installments. Once they accept it, proceed to pay the agreed amount within the provided time. While it is hard to qualify for OIC, it is an ideal option if you want to clear your tax liability to invest or borrow a loan.
3. Fresh Start Can Release Your Tax Lien
Securing investments and qualifying for credit may be challenging when you owe the IRS. But, with the Fresh Start initiative, you can apply for tax lien withdrawal.
This program involves paying your entire debt through a direct deposit. After that, you can request the IRS not to display this payment on your credit reports and public fiscal information. This way, your debt will not affect your credit score or financial credibility.
4. There Are Qualifications Requirements
Owing taxes does not mean you automatically qualify for the Fresh Start program. Each repayment option has specific requirements you must meet for the IRS to consider your case. First, you should not be bankrupt because the body needs to prove that you can repay the debt.
If you own a small business or are self-employed, you must calculate the amount of tax you expect to pay in the current year. After that, present this information when applying to the Fresh Start program of your choice.
You must also ensure that you filed taxes for previous years, even if you did not pay. Moreover, it should be clear that you cannot remit the total amount you owe due to financial problems.
5. IRS Determines If You Qualify
The IRS receives numerous applications to the Fresh Start Program. As a result, it may not be possible to accept all interested parties. After receiving tax relief requests, the IRS will assess them based on several factors. These may include:
- History of loan default
- Case credibility
- Tax filing accuracy
The next step will mainly involve assessing your financial position to determine if you are more qualified than other candidates. With this information, the IRS can decide if you are eligible and send feedback by mail.
Reach Out to Tax Industry for Resolution Services
Failing to observe some measures when applying for tax relief can reduce the chances of qualifying. At Tax Industry, we can assess your case to help you apply for the right Fresh Start program. Our experts can also enhance eligibility by ensuring all the information you submit is credible. Contact us today for tax resolution services.