Need A Fresh Start From Tax Debt? You Have Options

If your back tax debt is becoming more than you can handle, it could be time for a fresh start. The IRS has been providing a way for taxpayers in debt to get a fresh start since 2011. Aptly titled the Fresh Start initiative, this program helps taxpayers get a “fresh start” with their back tax debt. This program allows taxpayers and small businesses to pay back taxes and avoid IRS collections actions.

The program also permits taxpayers who qualify to avoid the IRS Failure to File penalty. The IRS places this penalty on unpaid back tax balances, and it accrues interest. Eligible individuals can request a six-month payment extension. During this payment extension, no penalties will accrue. Individuals will incur late payment penalties if they don’t pay the balance by a specific date. Fresh Start also provides an installment structure that allows taxpayers to avoid financial reviews and liens.

Who Can Qualify For The IRS Fresh Start Initiative?

There are specific requirements to qualify for the Fresh Start initiative. A tax attorney can help you determine if you are eligible for the IRS Fresh Start program. If you’re looking for a tax relief solution, the Fresh Start program may be for you. Here are the qualifications for the IRS Fresh Start program.

  • Individuals who work for themselves need to show at least a 25 percent drop in their net income.
  • Taxpayers cannot earn more than $200,000 per year if married, or $100,000 per year if single
  • Married couples who file jointly only need one spouse who meets the qualifications.
  • Entire tax balance must be more than $50,000 as of the end of 2011.
  • Taxpayers must file Form 1127A. The form is not available electronically.

Three Important Features Of The Fresh Start Initiative

Several essential features exist for the Fresh Start initiative. Those features are as follows.

  • Tax Liens: The Fresh Start program gave an increase in the amount that individuals can owe before the IRS files a tax lien. That amount is now equal to $10,000. In some cases, the IRS may still file a claim on amounts less than $10,000. Some taxpayers can have their lien withdrawn if they are paying back taxes through a Direct Debit installment agreement.
  • Installment Agreements: Taxpayers who owe up to $50,000 in back taxes can pay monthly direct debit payments for up to six years.
  • Offer in Compromise: The IRS is now more flexible when analyzing a taxpayer’s ability to pay. More flexibility makes the Offer in Compromise program available to more taxpayers.

Benefits of the Fresh Start Initiative

The IRS Fresh Start initiative helps taxpayers struggling to settle back taxes. The program also boosted the maximum to qualify for a streamlined installment agreement from $25,000 to $50,000. Taxpayers looking to settle back taxes can apply for this installment agreement if they pay back taxes in six years. The previous limit to pay back taxes through an installment agreement was five years. Also, taxpayers can avoid a tax lien by filing a direct debit installment agreement for balances of $25,000-$50,000. The initiative also makes it possible for more taxpayers to qualify for an Offer in Compromise deal. A tax resolution expert can help you identify if you are eligible for the Fresh Start initiative. If you owe more in back taxes than you can pay, the Fresh Start program might be an option for you.

Fresh Start Program And Tax Liens

The IRS also increased the threshold for filing a notice of Federal Tax Lien. The limit is now $10,000. Taxpayers who want to settle back taxes can also obtain a lien withdrawal once their balance is satisfied in full. Individuals can also receive a lien withdrawal if the balance is under $25,000 and they agree to direct debits. The latter is an integral part of the Fresh Start Program. Having a tax lien can hurt a taxpayer’s ability to obtain loans, credit, or sell a property. A tax relief professional can determine if you qualify for the Fresh Start program. If you do qualify, a tax attorney can also help you identify for which part of the program you are eligible.

What Happens After You Qualify For The Fresh Start Program?

The Fresh Start program can be an excellent way for an individual to settle back taxes. Check with a tax relief professional before applying for the Fresh Start program. A tax resolution professional can identify for which repayment or back tax settlement options you qualify. If you are eligible, your Fresh Start application applies in conjunction with the back tax repayment or settlement. Some back tax repayment or settlement options include:

  • Penalty Abatement
  • Installment Agreement
  • Offer in Compromise  
  • Tax lien release
  • Wage garnishment release
  • Business or payroll tax relief

How Do I Qualify for The Fresh Start Program?

You should hire a tax relief professional to help you submit the documentation to apply for the Fresh Start program. The documentation you will need includes proof of income, assets, and any other documentation the IRS might request. Once you’re in the Fresh Start program, you must file your taxes and make payments on time. If you defy the terms of the Fresh Start program, the IRS can dismiss you. Should the IRS reject you from the program, you will face paying your debt in full plus penalties and interest.

The IRS provides you a second opportunity to get back into taxpaying compliance. You can settle back taxes and avoid financial difficulties from your tax debt with the Fresh Start program.

Get Help Applying For The Fresh Start Program From A Tax Relief Professional

Hiring a tax relief specialist can get you a better outcome when applying for the Fresh Start program. 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. Also, that’s why the IRS offers programs like Fresh Start. However, it’s imperative that you work with a tax relief specialist who knows the program inside and out. 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.

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