You’ve probably heard of the Fresh Start Program because it’s used all the time in advertisements for the tax firms out there who want to pull you in with words but not knowing anything about your case.
So What Is the IRS Fresh Start Tax Program?
A large number of taxpayers fail to pay taxes to the IRS every year, making them susceptible to various penalties and liens. In 2008, the IRS came up with the Fresh Start Program to offer some concessions to taxpayers passing through a financial crisis. This is more of an initiative rather than a program that undergoes frequent modifications.
The IRS Fresh Start Program underwent major changes in 2012 when the IRS decided to loosen some of the stringent provisions of taxation so that a greater number of distressed taxpayers could benefit from the program.
It’s important to note that the name “Fresh Start Program” is the umbrella for a number of potential concessions the IRS may provide to you if you qualify such as:
- An Offer In Compromise
- A payment plan or installment agreement
- Tax levy or tax lien relief
Each of the above concessions have differing qualifications and offer different types of relief. You can click on any of the links to read more details on each of these tax relief options.
When Not To Use An IRS Fresh Start Program – In General
The Fresh Start Program and its various options have strict qualification requirements based on your current income, future income and your assets to name a few. Tax Firms talk about the Fresh Start Program so much that they make it out as if it’s the only way to resolve your case. A common mistake by taxpayers is to “fudge” some of these numbers to meet the requirements. This would be a serious mistake if not criminal in the eyes of the IRS.
Only 40% of Offer in Compromise under the Fresh Start Program are accepted and before that it was closer to 25%. I am sure the percentages are low because tax firms push the Fresh Start Program so hard that they convince taxpayers to try and resolve their case with it even when they don’t qualify. You’re not only back where you started but you’re out a big chunk of money.
If you do not meet the requirements of a Fresh Start Program you should seek other options, and there are many other options. Speak to a tax professional at the W Tax Group for free to learn how your specific tax issues can be solved.
If your income will improve dramatically in the near future.
If you know that your inability to pay your taxes today will change very shortly, it may be a better option to look into filing a tax extension and paying that amount as soon as possible. Otherwise, you’ll be kicked out of your resolution when the IRS catches wind of your new income and you’ll need a new resolution. There are other options to help you with very temporary financial hardships.
If you have unfiled taxes, incomplete tax returns or tax returns that need to be corrected.
The first thing you have to do to apply for a fresh start is to get up to date on all tax filings and ensure that all filings are correct and completed in full. So don’t let someone tell you to move forward with the Fresh Start Program if you have past tax returns due. If you need past returns prepared, then speak with a tax professional to get up into compliance in order to possibly use the IRS Fresh Start Program.
You are currently filing for divorce.
Divorce is a difficult time that involves many financial issues. If you are in the process of a divorce you should consult with a tax attorney before seeking tax relief from the IRS. There may be strategies to handle your taxes more efficiently and effectively before or after a divorce depending upon your circumstances.
The IRS Fresh Start Program offers significant tax relief to those who both qualify and need it, however it is also a very serious financial choice with positives and negatives that must be considered. Taking the time to fully understand the specific options for relief and what they mean to your financial future is a critical step in ensuring long term success. Seeking out professional tax advice to help you both understand your options and how they may impact you in the future is and important step.
