People are usually fearful of the IRS. A letter from the IRS is enough to fill them with fear, especially if they have an unpaid tax bill. They might end up in debt to the IRS and think that there is no way out of this. Thankfully, the IRS Fresh Start Program to help the taxpayers with tax resolution. Even if you have owed a debt for years, this program can help you get the tax relief.
The IRS Fresh Start Program is a tax resolution option from the IRS. The program makes it easy for taxpayers to pay their tax debt without having a levy on their assets. This is not a new initiative. It has been in place for several years. The program started in 2008 to help the taxpayers during the recession. In 2012, thanks to the changes introduced by the IRS, it became easier for the taxpayers with financial hardship to get their tax debt reduced.
Recently, the program was expanded to help people who are struggling with their tax debt. The IRS had made changes to their tax code for alleviating tax bills and helping out the taxpayers. The aim of this program is to provide tax resolution options to taxpayers. It allows them to pay back their debt without any excess fees of liens. The IRS might even forgive a certain amount of past debts or eliminate penalties for late fees.
Eligibility criteria for the IRS Fresh Start Program
- Owe $50,000 or less money in tax debt.
- Self-employed individuals who had a 25% or more drop in their gross income.
- Married couples who are filing joint-returns must have income less than $200,000 in a year. In this case, the amount earned by an individual taxpayer should be less than $100,000.
Repayment options offered through the IRS Fresh Start Program
Extended Installment Agreement
This tax resolution option reduces the fees and penalties imposed on the taxpayers. However, this need not be confused with the regular payment option.
The regular payment option is for taxpayers who are unable to pay their tax debt before the deadline, but the extended installment agreement is for taxpayers who are unable to pay penalties and other fees associated with debt before the deadline.
There are two forms of installment plans.
The first one is the short-term plan that is available without any fee for late payment. Also, there won’t be any fee for setting up this installment plan. These are for a period of 120 days and have penalties associated until the complete debt is paid off.
The second form is the long-term installment plan that will include some setup fees. It will depend on whether the payment is made by the taxpayers or if it is deducted automatically for the bank account.
The Fresh Start Program offers different tax resolution payment arrangements like stair-step, partial-pay, debt installment, or streamlined installment agreement. Now even though there are arrangements available, all taxpayers have to negotiate directly with the IRS for determining whether they are eligible for this or not. Depending on this, they might have to pay a certain amount over time through monthly payments. Regardless of the plan approved by the IRS, you have to ensure that every installment is paid in full and on time. Failure to do so will nullify the arrangement.
It is important to know that these payments are accompanied by a fee. In cases of debt of $50,000 or more, it requires taxpayers to submit Form 9465 and Form 433-F via mail or in-person.
Offer in Compromise
If you are unable to pay off your debt in full, there is an Offer in Compromise option offered by the IRS. For this, you will need the help of tax experts. Getting the IRS to agree to let you pay a reduced amount is a tricky process and requires the help of tax experts. There are several tax resolution services that can help you negotiate with the IRS.
To get your request for an Offer in Compromise accepted, you’ll have to prove to the IRS that paying their taxes will result in financial hardship.
To determine whether you are qualified for this tax resolution option, the IRS will be checking your current and future income and expenses. Also, the IRS will first determine if the reduced amount from the offer in compromise is more or at least equal to the amount they expect to receive from the taxpayer through the collection actions.
Here are the three criteria that can determine your eligibility:
If the IRS thinks that they won’t be able to get any money from you through collection actions, they might accept your ‘offer in compromise’ request. If they think that you have assets that might get them a higher amount of money, they won’t accept your OIC. Please note that a levy on a lien can impact your credit score, affecting your ability to buy any assets or apply for a loan.
2. Liability and accuracy
This includes proving that you don’t owe the money the IRS is claiming. If you think that there was an error during tax preparation, IRS might agree to let go of the initial owed amount and take your offer. For this, you need to take the help of tax resolution services.
3. Effective tax administration
When the IRS believes that paying the complete amount will lead to severe financial hardship for you, they might accept your offer in compromise.
IRS very rarely accepts the Offer in Compromise. To make sure that you even have a slight chance at this tax resolution option, you need the help of tax experts. Once your offer is accepted, all the payments should be made in time. Failure to do so will nullify your OIC, and you will have to pay the complete amount.
Tax resolution is a way to make the process of paying taxes easier for people undergoing hardships. However, if you earn well and have assets, the IRS won’t be accepting your request. If you are going through a financial hardship, you need the help of tax resolution services to help you get back on your feet.
- FinishLine Tax Solutions is a full-service, fully accredited tax resolution firm in Houston, TX, assisting companies and individuals nationwide in resolving tax problems with the IRS. We specialize in areas of back taxes such as IRS wage garnishments, IRS bank levies, and unfiled tax returns. Our team of experts comprised of licensed Enrolled Agents, CPAs, & IRS Tax Attorneys can assist you with IRS Audit Representation and Tax Planning. We are one of the leading tax resolution firms in the nation and your go-to tax relief firm that can take you to the Finish Line. Call us today to learn more about our tax relief process.
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