7 Things You Need To Know About the IRS Fresh Start Program
You may have heard about the IRS Fresh Start program from radio, tv and online ads. These advertisers make many generic claims, but are they true and can an IRS fresh start help me?
1. Is the Fresh Start Program really from the IRS?
YES. The IRS began Fresh Start in 2011 to help struggling taxpayers including individual tax payers and small businesses. Now, to help a greater number of taxpayers, the IRS has expanded the program by adopting more flexible Offer-in-Compromise terms. This expansion will enable some of the most financially distressed taxpayers to clear up their tax problems, possibly more quickly than in the past.
2. What is an Offer in Compromise?
An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, the IRS does not accept an OIC if they believe the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination of the taxpayer’s reasonable collection potential. OICs are subject to acceptance on legal requirements.
3. What Assets Does The IRS Consider?
The IRS has relaxed some of its rules when it evaluates your future income, and how much income you can be earning today and still qualify for an Offer In Compromise. That said, this evaluation is best done by a tax professional who is experienced with the IRS’s formula.
4. How Soon Can I Complete a Fresh Start Program?
Your exact time needed to negotiate and pay off your tax debt is highly dependent upon your current situation. So there is no hard rule here. However, the IRS recognized that long lasting programs tend to produce poor results. Therefore, they have enacted changes to enable some to resolve their tax problems in as little as two years compared to four or five years in the past. Again, working with a tax professional can help you determine if you qualify and how long it may take to complete.
5. How is Collection Potential Now Calculated?
Collection potential to the IRS means your ability to pay back a tax debt. When the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years; and two years of future income for offers paid in six to 24 months, down from five years. All offers must be fully paid within 24 months of the date the offer is accepted.
6. Does the IRS post information about Fresh Start I can Read?
YES. Information about the OIC program, including applicant qualifications, how to apply and steps to complete the application process, Form 656-B, Offer in Compromise Booklet and Form 656, Offer in Compromise, is available on IRS.gov.
7. How Can I Determine IF I should use a Fresh Start program and IF I even qualify?
You can always work directly with the IRS, however you should note, there is little to no personal help, you will need to complete complicated tax forms on your own and negotiate with them directly. The W Tax Group specializes in IRS Fresh Start programs. We know exactly how to evaluate you for qualification and if you’re a good candidate how to negotiate the best deal for you! Our consultations are always 100% free, so learning your options is risk free.
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Lead Tax Attorney, The W Tax Group