IRS Fresh Start Program: Requirements and Options

What Is IRS Fresh Start? Requirements for the Fresh Start Initiative

The IRS Fresh Start Program was created to help people who owe back taxes but are struggling to find a way to pay. Like any other type of debt, tax debt can create a vicious cycle. If you’re struggling to pay one year, you might not be able to pay the next year or the next year, and so on. 

To help people out, the IRS has a number of ways that you can get a “fresh start” on your taxes. The right option varies based on your situation. We can help you find the best program for your needs — contact us at the W Tax Group today to talk about your options. 

What Is the IRS Fresh Start Program?

The Fresh Start Program is a program that has a number of tax relief options that can be used to help taxpayers reduce, pay down and pay off tax liabilities. Each of the options in the IRS Fresh Start Program comes with its own benefits, rules, regulations, and qualifications. 

Types of Fresh Start Initiatives

Here are the most common resolution options under the Fresh Start Program and a look at the qualifications you need to take advantage of these options. Again, the right option depends on your unique situation. You have to consider how much you owe, how much you can afford to pay, and your history of tax compliance. 

IRS Offer in Compromise

An Offer in Compromise (OIC) allows a taxpayer to settle back taxes due for less than what is owed. In short, based upon your qualifications and ability to repay your existing tax liability, a reduced offer to pay off the liability is presented to the IRS. If and when an offer is accepted by the IRS, making full payment of that reduced offer amount wipes clean the principal amount owed along with all interest and penalties.

You usually have to pay an offer in compromise in a lump sum. For instance, if you owe $100,000 and offer to pay $80,000, you should be prepared to pay as soon as possible. However, in some cases, you can get up to 24 months to pay off the offer. 

IRS Lien Withdrawal or Subordination

Under certain circumstances, taxpayers can submit an application to have their tax lien withdrawn or subordinated. In addition, the IRS will generally not seek a tax lien when a taxpayer owes less than $10,000. You may also be able to avoid a lien by making arrangements to take care of your tax debt through one of the other Fresh Start options. 

IRS Installment Agreement

Taxpayers owing less than $50,000 may be eligible to pay their taxes due monthly over a six-year period. Most penalties are stopped when you set up a payment plan, but interest continues to accrue. Traditionally, taxpayers who owe more than $50,000 or need more than six years to pay off their tax liability are required to provide extensive documentation.

What Is IRS Fresh Start?

Fresh start is not actually an IRS program. It’s a phrase the IRS used when it rolled out several taxpayer-friendly changes in 2011. The changes were designed to help taxpayers who were struggling with IRS tax debt, but the wording really caught on. Big tax resolution firms started to advertise a fresh start like it was a real IRS program and not just a collection of tax resolution options.

In 2011, the IRS made the following updates to help taxpayers get a fresh start:

  • Not issuing federal tax liens until a taxpayer owes at least $10,000 in tax debt. The IRS used to issue tax liens when you owed just $5,000. 
  • Allowing taxpayers to get liens withdrawn once they pay the tax, file required returns for three years, and stay on top of all tax payments. 
  • Allowing lien withdrawals for taxpayers who set up installment plans with automatic withdrawals from their banks. 
  • Allowing businesses to set up direct debit monthly payments with a streamlined application if they owe less than $25,000. Before the Fresh Start Initiative, the limit was $10,000.
  • Letting individuals set up streamlined payment plans online if they owe up to $50,000.
  • Streamlining the offer in compromise program and allowing taxpayers to apply even if their income was up to $100,000. 
  • Reducing the amount of future income the IRS considers when reviewing an OIC application. 
  • Providing penalty relief for tax year 2011. 

Since 2011, the IRS has rolled out even friendlier policies. For instance, most taxpayers who file or pay late can usually get penalty abatement the first time it happens. You may be able to get a streamlined payment agreement on up to $250,000 in tax debt if your case hasn’t been assigned to a revenue officers. These types of programs are all designed to give taxpayers a fresh start. 

How to Apply for the IRS Fresh Start Program

You can’t actually apply for the Fresh Start Program. Instead, you need to choose the specific program that you want to use. Then, you need to apply for that. The application process varies depending on the resolution option you decide to pursue. 

For instance, say that you want to set up a monthly payment plan. You may be able to do that online or by submitting a paper form. If you owe less than $50,000 and can pay off the balance within six years, you usually don’t need to submit that much information. 

If you need a longer time frame or want to make less than the minimum payment, you may need to file a financial disclosure. This means that you provide the IRS with a lot of financial details so the agency can ensure that you’re paying as much as you can afford. 

However, even with the same resolution option, the process can vary from year to year. For instance, the IRS offers more lenient terms for taxpayers who need to set up payments on their 2019 taxes. This was because these taxes were due at the beginning of 2020. When the COVID pandemic hit, many people couldn’t pay their 2019 bills so the IRS built some leniency into the application process for payments on 2019 taxes. 

There can also be a different application process depending on the subsection of the program you’re applying for. For example, if you want to apply for an Offer in Compromise, you need to submit the required forms, but they vary based on the program. If you’re applying based on doubt as to collectibility or fair tax administration, you need to provide detailed financial information. If you’re applying based on doubt as to liability, you need to prove why you don’t owe the tax, but you don’t need to provide as many financial details. 

Qualifications for the Fresh Start Program

The Fresh Start Tax Relief program includes some of the most powerful tax relief options ever offered by the IRS. So how do you qualify for the Fresh Start Program? Again, this is just an umbrella term for several of the IRS’s tax resolution options. The qualifications and requirements vary based on the program you want to use. 

In most cases, however, you must be in strict compliance before you can even be considered for any of the Fresh Start initiatives. That means that in addition to applying for one of these programs, you must first take care of your unfiled tax returns. Additionally, you must make a plan to stay compliant with future tax filing and payment requirements.

Each tax relief option within the Fresh Start Program requires its own specific qualifications which generally consist of the taxpayer providing highly specific and accurate financial forms prepared with accuracy. They usually must be signed under the penalty of perjury — which means that if you provide incorrect information, you may be committing fraud. You also need to provide the right substantiating documentation. 

But the IRS will not even consider you for the relief offered under the Fresh Start Program or most other initiatives, unless you are found to be current and compliant with your taxes. Therefore, you must have all past tax returns filed and correct, all current year estimated payments paid up to date, all current year payroll tax deposits made and quarterly tax returns filed. To ensure you meet all the Fresh Start requirements, you may want to work with a tax professional. 

Is the Fresh Start Program Legitimate?

The Fresh Start Program is legitimate, but the way that people use these phrase isn’t always accurate. To understand what’s happening, you need to look at the history of the Fresh Start Program.

The IRS created the Fresh Start Program in 2011. This program didn’t actually create any new options for taxpayers. People with tax debt have almost always been able to set up payment plans or apply for offers in compromise. However, the Fresh Start Program expanded the rules for these programs. It made it easier for taxpayers to qualify for these programs. It helped taxpayers get more effective relief from their back taxes. 

The IRS doesn’t really use this phrase anymore, but that doesn’t mean that relief isn’t available. In fact, over the last 12 years or so since creating the Fresh Start Program, the IRS has improved these programs even more. Now many of these options are even easier for taxpayers to obtain, but to get accepted, taxpayers need to know the rules. They need to understand the IRS’s expectations for the program they use. 

Applying for IRS tax relief can be complicated, and a tax professional can be an invaluable asset during the process. At the W Tax Group, we keep on top of all of the IRS’s updates to its tax relief programs. Whether we’re dealing with the Fresh Start Program, voluntary disclosure, or any other type of tax resolution, we help our clients find the best options for their needs, and we ensure they get the most benefit possible from the program they select. 

Why Is the Fresh Start Program So Popular?

Again, the Fresh Start program is popular because it’s leveraged as a marketing tool. The IRS issued a lot of press releases when it launched this program, and tax resolution firms have been talking about it for years. However, it was really just a set of updates to the tax resolution process. Since it was rolled out, there have been even more taxpayer-friendly updates. 

How Can The W Tax Group Help Me Get a Fresh Start?

At the W Tax Group, our expertise is tax relief! We know the ins and outs of the Internal Revenue Manual, the IRS Code, and the programs available for tax relief. We understand everything the IRS offers to provide relief from back taxes. The Fresh Start Program is our specialty. 

We understand ALL of the specific tax forms that need to be submitted in order to qualify for the best possible relief for your specific situation and we have professional CPAs who can correct and file all current and past tax returns. We negotiate with the IRS so they do not take advantage of what you do not know. We prepare and submit the complicated forms and extensive documentation that determines whether you receive tax relief and get a real fresh start. We make sure you receive the most favorable outcomes allowable under IRS administrative law.

Ready to deal with your back taxes? Then, take action now. For a free consultation, you can call us directly right now at 877-500-4930 or submit a Consultation Request.

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