What is the IRS Fresh Start Program?

If you’ve been trying to manage tax debt, whether it’s been one year or for longer than you can remember, you might not know there is a better way. The IRS Fresh Start Program, launched in 2011, offers several debt relief options for individuals and small businesses that have federal tax debt.

The program makes it easier for taxpayers who have not paid the full amount of taxes they owe several ways to avoid having tax debt and unpaid penalties hanging over their heads. Solutions might include reducing or freezing the tax debt you owe or paying back your tax debt over a certain period of time.

The program provides different levels of debt relief and repayment plans depending on an individual taxpayer’s situation. An experienced tax attorney can help you figure out the right plan for you.

How does the IRS Fresh Start Program work?

To get started with the IRS Fresh Start Program, you need to submit certain forms and documents to the IRS. Then, you will have the opportunity to set up a plan that might involve monthly payments, a lump sum payment or deferred payments.

What are the possible ways to solve my IRS tax problem under the IRS Fresh Start Program?

If you’re losing sleep over your IRS tax problem, there are several ways you might be able to resolve your tax debt under the IRS Fresh Start Program.

It is important to remember that not every solution will work for every person or business. Your skilled tax lawyer can help advise you on what solution will be most effective for you. Also, you need to qualify for relief. It isn’t simply offered to everyone.

Here are some of the most common options for federal tax debt relief under the IRS Fresh Start Program. Tax attorney Sammy Kim has experience with negotiating all of these plans for her clients and can help you get the best outcome in resolving your IRS tax problem.

Offer in Compromise: One of the most well-known options for resolving IRS tax debt is an Offer in Compromise, which has been part of the Tax Code for many years. An Offer in Compromise allows you to settle your tax debt for an amount that is less than what you owe.

The IRS Fresh Start Program made the Offer in Compromise option available to more taxpayers.

Installment Agreement: Under the Fresh Start program, one of the most popular solutions is an extended installment agreement, which allows you to pay your tax debt over a period of up to six years (72 months). The IRS will decide what amount you can afford to pay each month based on your assets and income.

Individual taxpayers who owe up to $50,000 in IRS tax debt and businesses that owe up to $25,000 in IRS tax debt may qualify for a Streamlined Installment Agreement. That means you can pay your tax debt through monthly direct debit payments for up to 72 months (6 years) without verifying your assets, income, expenses, or liabilities.

The pandemic further increased the tax debt limit up to $250,000 to help arrange an Installment Agreement for the taxpayers with limited financial disclosure. If you are in this situation, please consult a competent tax lawyer who actually practices before the IRS on a daily basis.

When you have an installment agreement in place, you no longer have to live in fear that the IRS will seize your assets or garnish your income.

Currently Not Collectible (CNC): You might be able to be classified as Currently Not Collectible (CNC) status if the IRS finds that your gross monthly income is less than your allowable expenses, based on national standards. That means that based on your financial details, you have proven that you cannot pay your tax debt without severe financial hardship.

This status means that the IRS will stop collection actions against you. But your tax debt will not be forgiven. It will continue to accrue penalties and interest, and the IRS will apply your refund to the old tax debt. Current compliance is also very important.

Penalty Abatement: In certain circumstances, you might be able to get relief from the penalties that have been assessed against you for failing to file your tax return, failing to pay on time, or failing to deposit your estimated taxes when they were due. You can also appeal certain penalties based on reasonable cause.

Tax Lien Relief: The IRS Fresh Start Program increased the tax debt threshold for filing a tax lien notice against a taxpayer’s assets from $5,000 to $10,000.

The Fresh Start Program also provides the option for a taxpayer to enter into a direct deposit installment agreement with the IRS to stop a lien from being placed on your property. That applies for people with tax debt of $25,000 or less, and some other criteria must be met.

How do I apply for the IRS Fresh Start Program?

There are many different forms, rules and procedures to choose from and figure out in order to apply to the IRS Fresh Start Program. The best way to ensure you are filing the correct forms and providing the right information is by hiring an experienced tax attorney.

To apply for an Offer in Compromise, you will need to use IRS Form 656 Offer in Compromise and make sure the information in this form is backed by the IRS Form 433-A (OIC) Collection Information Statement for Wage Earners and Self-Employed Individuals (and/or IRS Form 433-B (OIC) Collection Information Statement for Business).

Sometimes, you can be deemed Currently Not Collectible through Form 433-A or Form 433-F, depending on your circumstances and methods of communication with the IRS.

To apply for an Installment Agreement, you will need to use IRS Form 9465 Installment Agreement Request. Form 433-D can be used as well.

To apply for Penalty Relief, you must file IRS Form 843 Claim for Refund and Request for Abatement.

To apply for withdrawal of a federal tax lien, you must file IRS Form 12277 Application for Withdrawal of Filed Form 668 (Y) Notice of Federal Tax Lien.

To apply for the IRS to discharge the lien from your property so it can transfer to a new owner, you must file IRS Form 14135 Application for Certificate of Discharge of Property from Federal Tax Lien. The turnaround time is typically more than 45 days after a submission of required documents, so be sure to time your closing accordingly.

How can an experienced tax lawyer help me get tax debt relief through the IRS Fresh Start Program?

If you lay awake at night worrying about the IRS taking your assets or business to pay for your tax debt, the IRS Fresh Start Program might sound like total salvation. While it is true that the options under the program allow you to pay off your IRS tax debt more easily, the process can be complicated and confusing as you attempt to navigate the best solution.

Tax attorney Sammy Kim has worked with the IRS for many years. She can complete the required forms and provide all the information needed to the IRS. She can also help you select which program to apply for and fill out the forms for you. And then, she will work with the IRS on your behalf to negotiate the best possible outcome and resolve your tax debt … for good.