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Starting Fresh: 5 Things to Know About the IRS Fresh Start Program

It’s common for taxpayers to get in over their heads and end up owing the IRS a lot of money from one or more previous tax seasons.

Rather than avoiding your mailbox for fear of what mail you might receive from the IRS, you should think about getting tax help.

When it comes to the stressful and complicated world of taxes, you should rest easy knowing that you have options, such as the IRS Fresh Start Program.

You’re probably wondering what this Fresh Start initiative is and how it might apply to your financial situation.

Keep reading to learn about 5 things you need to know about the IRS Fresh Start Program.

1. What is the IRS Fresh Start Program?

‘IRS help’ might sound like a contradictory phrase but from 1998 to the present day, the IRS has been making headway when it comes to helping people file their taxes rather than knocking down doors.

It should be noted that the IRS Fresh Start Program is actually a set of changes that have been implemented over time. The tax code used to be more stringent before these changes but now it’s becoming more manageable.

Instead of the IRS tying up your house or vehicle in a lien, taxpayers who are in a financial pickle have more options for paying off their debt. This has become especially true since 2019 when the IRS expanded its program further.

If you’re unemployed or find yourself in an increasingly difficult financial situation, you should consider taking advantage of one or more of the options available to you.

The options you have might include the erasing of past debts or the removal of late fees on delayed payments.

2. Avoiding Tax Liens

If you’re unable to pay your tax debts, the IRS might make a legal claim on your property, whether it’s your home, your car, or another asset. This is what’s called a federal tax lien.

This can affect your credit, your business, and, of course, any or all of your assets. Even if you file for bankruptcy, a federal tax lien could still apply.

You can get rid of a tax lien by paying off your debt but if you’re unable to, you have other options.

The threshold for a federal tax lien used to be $5,000 but the IRS Fresh Start Program has changed it to $10,000. If this still doesn’t help you, then don’t worry.

Another option you can take advantage of is opting for automatic payments toward your tax debt. If you have less than $25,000 in debt, then the automatic payments can ensure that any liens are lifted.

When you qualify for a lien to be lifted, you’ll need to fill out an IRS Fresh Start Lien release request.

3. Getting Installment Agreements

As is often the case when someone is in debt, they simply need enough time to pay it off. The IRS has taken this into account and has created options that people can take advantage of.

One payment option that could be available is called an ‘installment agreement.’

If you owe the IRS less than $50,000 in taxes, then you can apply for an installment agreement. This will allow you to pay a set amount each month for up to 6 years.

Aside from a cap on the amount owed, you also have to be willing to go ahead with a direct debit payment method.

If you owe more than $50,000 or need more than 6 years to pay off your debt, you might still be able to apply for an installment agreement. However, you’ll also need to get approval by using a Collection Information Statement.

4. Negotiate Offers in Compromise

Yet another option that could be available to you is what’s called an ‘offer in compromise.’ This will involve negotiating with the IRS to reduce the size of your debt owed. This method will require a full analysis of your financial situation, of course.

When determining a new amount owed, the IRS will gauge how much money they could expect to get from you, if not the full amount. If they think that forced collections will provide them with more money than a reduced amount of debt, they will go with that instead.

Another way you can arrive at an offer in compromise is by demonstrating to the IRS that the amount you owed is not accurate. If your large debt is due to an error, you could get that debt amended to a lower amount. This kind of situation is best handled by tax professionals working on your behalf.

You could also reduce the amount you owe if you can convince the IRS that your debt will cause severe financial hardship.

5. Can Anyone Qualify?

There are some general factors that can help you determine whether you qualify or not.

For example, if you’re self-employed, then you’ll need to provide proof of a nosedive in your net income amounting to 25% or more.

A taxpayer who is single must have earnings that are less than $100,000 every year. On the other hand, married taxpayers who file together will need to have earnings that are less than $200,000 every year.

Generally, the cap on IRS tax help is $50,000 in debt. If you owe more than that, then the IRS might not be so forgiving or lenient.

Of course, the best way to assess your financial situation and the options available to you is by consulting with tax professionals.

Ready to Take Advantage of the IRS Fresh Start Program?

Now that you’ve learned all about 5 things you need to know about the IRS Fresh Start Program, you can start on the road toward a brighter financial future.

Fidelity Tax Relief can help you solve your tax problems with expertise and professionalism. Instead of sweating over a bunch of complicated paperwork, our knowledgeable team members can guide you during tax negotiations, settlements, IRS wage garnishments, and more.

If you have any questions about our highly-rated services, feel free to contact us. We’re always happy to help.

Time is running out!​

When you owe money on your federal taxes, one of the common collection actions taken is IRS tax garnishment, typically on your wages or salary. Wage garnishment can leave a person with very little money on which to live. 

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