How To Pay Off Back Taxes During Tough Financial Times

Thanks to the IRS, there’s an easier way for taxpayers to qualify for tax relief. The Fresh Start initiative gives struggling taxpayers a more straightforward way to pay back taxes. Working with a tax resolution firm can help you determine which tax resolution program would be best for you. If you’re in trouble with the IRS, you aren’t alone. Millions of Americans owe the IRS back taxes. To help the situation, the IRS reimagined some of their tax collection programs. With the Fresh Start program, paying back taxes is now more accessible and helpful for taxpayers. 

What is the IRS Fresh Start program?

During 2008, the U.S. suffered an economic crisis that left millions of Americans unemployed. Several years later, in 2011, the IRS implemented several programs to help struggling taxpayers. The Fresh Start program offered taxpayers an alternative to settle back taxes. 

What are the benefits of the Fresh Start initiative?

The Fresh Start initiative has been successful in helping millions of taxpayers settle back taxes. According to the Treasury Inspector General for Tax Administration, from 2010-2013, the number of Notices of Federal Tax Liens decreased. On liabilities below $10,000, the number of notices sent by the IRS went from over 480,000 to less than 200,000. Additionally, many taxpayers took advantage of the initiative’s streamlined payment programs to pay back taxes.

How Does The Fresh Start Program Work?

The Fresh Start program contains a string of measures designed to help individuals and small businesses pay back taxes. There are no forms to apply for the Fresh Start program. Instead, the IRS offers a variety of tax relief measures from which to choose. The four main tax relief measures include:

–    Tax lien relief

–    Installment Agreements

–    Penalty Abatement

–    Offer in Compromise

How has the IRS affected tax relief programs?

The installment of the IRS Fresh Start program affected multiple tax relief programs. Details on these effects are below.

Tax liens

– The Fresh Start program increased the debt threshold that leads the IRS to place a tax lien on a taxpayer. A taxpayer must owe more than $10,000 before the IRS can place a lien on their property. Previously, a taxpayer only needed to owe $5,000 before the IRS puts a line. The program also makes it easier for taxpayers to remove tax liens from their property when paying back taxes.

Penalty Abatement

– If you don’t file or pay taxes on time, the IRS charges penalties and interest on your balance due. Sometimes, the penalties can add up to 40 percent of the taxpayer’s debt. The Fresh Start program provides opportunities for taxpayers to reduce or remove tax penalties. Taxpayers may receive tax relief from penalties for not filing a tax return, paying on time, or making required deposits. 

Applying for Installment Agreements and Offer in Compromise under the Fresh Start Program

The IRS’ Fresh Start initiative also made changes to how taxpayers can apply for several tax resolution initiatives. These changes specifically affected the Installment Agreements and Offer in Compromise.

Installment Agreements

– It’s now easier for delinquent taxpayers to set up an Installment Agreement under the Fresh Start initiative. Taxpayers can apply to obtain Installment Agreements for up to 72 months online for up to $50,000 of debt. Additionally, taxpayers will not have to provide a financial statement when applying for an Installment Agreement. There are Installment Agreements also available for more massive tax debts. However, for deficits more significant than $50,000, taxpayers will have to show a financial statement.

Offer in Compromise

– With an Offer in Compromise deal, taxpayers may be eligible to settle their back taxes for less than they owe. The Fresh Start program expanded and streamlined the Offer in Compromise program. When determining eligibility for an Offer in Compromise, the IRS only looks at income for the next 12 -24 months. 

Can I get a tax lien removed from my credit score with the Fresh Start program?

While the Fresh Start program doesn’t erase your debt, it does give you more options to settle back taxes. The Fresh Start initiative allows you to withdrawal your tax lien from public records in your home country. Withdrawing a tax lien from your public record can improve your credit score. A favorable credit score makes it easier to get a loan or make financial arrangements requiring a credit check. To qualify to withdraw your tax lien from your credit report, you must pay off your debt in full. 

Who qualifies for the Fresh Start program?

The IRS doesn’t have one specific set of requirements that qualifies one for the Fresh Start program. Eligibility requirements will vary depending on the tax relief program chosen. Although there are general requirements, most tax relief applicants must meet. Even if a taxpayer qualifies for a tax relief program, it doesn’t mean they should apply for it. Before deciding to apply for a tax resolution program, you should contact a tax relief professional. A tax relief professional can help you determine which tax relief program is best for you.

Requirements for the IRS Fresh Start program

To qualify for tax resolution under the IRS Fresh Start program, you must:

–    Show the IRS proof you don’t have the money or assets to pay back taxes

–    File all past tax returns you are legally required to submit. You should still file your taxes even if you can’t afford to pay

–    Take care of all required estimated tax payments for the present year. This requirement applies to self-employed workers and small business owners.

–    Make any required federal tax deposits

–    Do not be in an open bankruptcy proceeding

Get Help From A Tax Relief Professional

Hiring a tax relief specialist can get you a better deal when attempting to pay off back taxes. A tax attorney can help you determine which repayment method is right for you. The tax resolution specialist can also negotiate with the IRS on your behalf and submit the necessary paperwork. Owing back tax debt can leave you in bad financial shape. The IRS only wants to get what money you owe them in back taxes. Often, they are willing to help you settle back taxes, but you have to know how to try. That’s where a tax relief services company can come in handy. When you hire a tax resolution professional, there are other methods you can use to avoid expensive back tax debt. Call Platinum Tax Defenders for a free consultation today.