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IRS Tax Relief – IRS Forgiveness – Offer in Compromise

If you owe the IRS and can’t pay, you may qualify for the IRS Debt Forgiveness Program. The IRS Forgiveness Program is officially called an Offer in Compromise. The Offer in Compromise program is the ultimate IRS Tax Relief option.

Under certain circumstances, financially struggling taxpayers can have their IRS tax debt partially forgiven. The IRS will never take 0 dollars as a settlement. The IRS will go as low as $100 as a total settlement. When the IRS considers “IRS Forgiveness”, the present financial condition of the taxpayer is of primary importance. That means the IRS cannot collect more than a taxpayer can pay. If any collection action by the IRS would force a tax debtor into a financial crisis, the IRS cannot collect the back taxes.

IRS Tax Relief – IRS Forgiveness – Offer in Compromise

Taxpayers that have the resources to pay only a partial amount of their tax debt can apply to the IRS government payment plan called an Offer in Compromise to resolve the remaining amount. Depending on the financial capacity of the taxpayer, the IRS significantly reduces the total debt to an amount that the taxpayer can pay. This reduced amount can be paid in a lump sum or in fixed monthly installments.

IRS Tax Relief – Fresh Start Initiative is an “Expansion” of the Offer in Compromise Program

To make it easier for taxpayers to qualify for an IRS Forgiveness in the Offer in Compromise program, the IRS has expanded their Fresh Start Initiative. Under these more flexible rules, taxpayers do not have to disclose extensive financial details to the IRS to judge their paying ability. The Fresh Start Initiative for IRS Forgiveness offers financially struggling taxpayers the following advantages:

  • The IRS now looks at only one year of future income for offers if they are paid in five or fewer months when calculating a taxpayer’s reasonable collection potential. This is down from previous four years. For agreements of six to 24 months, the IRS now looks at two years of future income instead of the previous five years.
  • Taxpayers are now allowed to make their student loans’ minimum payments for post-high school education loans guaranteed by the federal government.
  • Taxpayers may, under certain conditions, pay delinquent federal and state or local taxes in monthly installments if they cannot pay it in full.
  • The standard allowance for the Allowable Living Expense amount has been expanded. This allowance now includes credit card payments, bank fees and charges, and other miscellaneous allowances.

What Should You Do Next?

Understanding your IRS tax debt and dealing with the IRS isn’t easy to do alone, even with programs like IRS Forgiveness. Luckily, there are IRS Tax Relief professionals at Flat Fee Tax Service, Inc. who can help you navigate your IRS Forgiveness options.

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IRS Fresh Start Initiative – IRS fresh start initiative – Tax Debt Forgiveness Program

The IRS Fresh Start Initiative has had one goal: to make it easier for individuals and businesses to receive IRS tax relief and to pay their back taxes and IRS penalties. The IRS Fresh Start Initiative has been expanded since then, but still holds true to its original purpose. How exactly will it affect you if you’re struggling to pay up? Here are the four components that the IRS Fresh Start Initiative has changed for your benefit.

What Is the IRS Fresh Start Initiative Program?

The image of the IRS is one of intimidation. Whether deliberately cultivated or not, the IRS does little to dispel this perception. In recent years, the IRS has sought to reboot the way it interacts with taxpayers, with IRS agents receiving training and instruction in how to assist taxpayers who are in arrears. The IRS Fresh Start Initiative combines IRS penalty relief, installment payments; federal tax lien releases and a program known as Offer in Compromise that allows many taxpayers to settle their federal tax debts for less than what they actually owe.

How the IRS Fresh Start Initiative Will Help Waive IRS Tax Penalties

Originally, when paying and filing your taxes, missing the April deadline meant immediate interest charges and penalties. But with the IRS Fresh Start Initiative, qualifying unemployed taxpayers can apply to have Failure-to-Pay penalties waived for six months.

The IRS Fresh Start Initiative program was launched in 2012 to help taxpayers who were struggling with the effects of the ongoing financial crisis. The first aspect of the program provided some unemployed taxpayers with exemption from the failure-to-pay penalty.

To qualify for this aspect of the IRS Fresh Start Initiative, wage earners must have been unemployed for at least 30 consecutive days. Self-employed taxpayers must have experienced at least a 25 percent reduction in income due to adverse economic conditions. The IRS also set maximum income limits of $200,000 for married taxpayers filing jointly.

Easy Installment Agreements: 

The IRS Fresh Start Initiative Program also raised the maximum tax owed for taxpayers from $25,000 to $50,000 to qualify for streamlined repayment plans. Under the Fresh Start Initiative payment agreement program, taxpayers may establish payment plans online through the Online Payment Agreement page located on the IRS website (IRS.gov). Taxpayers who owe more than $50,000 may still establish an IRS installment agreement but must either file a Collection Information Statement (Form 433-A or Form 433-F) or make sufficient payments against their past-due tax balance to bring the total tax owed below the $50,000 threshold.

How To Withdraw Notice Of Federal Tax Lien: 

The IRS Fresh Start Initiative raises the minimum threshold for filing an IRS Notice of Federal Tax Lien on taxes owed from $5,000 to $10,000. The new standard is not retroactive, and the IRS may still impose liens against taxpayers who owe less than $10,000 when the agency deems that circumstances warrant doing so. To request that the IRS withdraw the Notice of Federal Tax Lien against liens that have been released, taxpayers must file Form 12777 – Application for Withdrawal, available on the IRS website.

How To Make Use of the Offer in Compromise Program and Settle Your Tax Debt:

An Offer in Compromise, according to the IRS Fresh Start Initiative, allows taxpayers to settle their obligations to the IRS for less than the total amount owed. The IRS only allows taxpayers to obtain IRS tax relief under the Offer in Compromise program in circumstances where requiring repaying the full back taxes owed would constitute an undue burden or in cases where taxpayers demonstrate that they will be unlikely ever to be able to pay the full amount owed.

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PER 2016 IRS STATISTICS: THE IRS APPROVED 42% OF THE

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The IRS Fresh Start Initiative has established more flexible standards in evaluating the financial standpoint of taxpayers who request relief under an Offer in Compromise. As a result, more taxpayers may qualify. .To be eligible for IRS tax relief under the Offer in Compromise program for grounds other than Doubt as to Liability, taxpayers must meet all of the following conditions:

  • Cannot have an open personal or business bankruptcy petition
  • All required tax forms must have been filed
  • All required tax payments for the current year must be paid
  • Business owners with employees must have made current quarterly tax payments

An Offer in Compromise may be either for a single lump-sum payment or for installment payments. To request an Offer in Compromise, taxpayers must submit Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses along with either $186 to cover the application fee and either a payment of 20 percent of the proposed lump-sum payment or an amount equal to the first proposed monthly installment payment. Individuals and sole proprietors who qualify under Low-Income Certification guidelines set by the IRS are exempted from paying the application fee.

New Installment Guidelines according to the IRS Fresh Start Initiative:

IRS Installment agreements allow a person to make monthly payments on their tax debt if they can’t afford to pay the total at once, and/or aren’t eligible for an Offer in Compromise. In the past, once an individual’s tax balance reached $25,000, the IRS began conducting a financial analysis of the person’s income and expenses to determine how much the taxpayer would pay per month. Additionally, a Notice of Federal Tax Liens was filed.

Under the IRS Fresh Start Initiative, more taxpayers will be able to avoid this invasive process altogether, as the tax balance threshold has been raised to $50,000. At that point, once the installment agreement process is started, you’ll now have six years to pay the debt off. If you are considering entering an installment agreement, let our tax relief team know and our IRS Tax Attorneys will make sure you qualify.

Notice of Federal Tax Liens and the IRS Fresh Start Initiative:

If an individual fails to pay their tax debt the government can file a claim against that person’s property with a federal tax lien. “Property” includes everything an individual owns, including real estate, vehicles and financial assets. The Notice of Federal Tax Lien alerts creditors that the government has a legal right to a taxpayer’s property. This may limit your ability to get credit.

Similar to installment agreements, FSI has raised the Notice of Federal Tax Lien filing threshold to $10,000 from $5,000. The IRS might still choose to file at an amount less than $10,000, but it’s not as automatic as before.

How the IRS Fresh Start Initiative can help with your Tax Problems:

While none of these alternatives represents an easy solution, each of them does provide a viable avenue for IRS tax relief. If you have been struggling to pay your federal income tax burden, investigating possible assistance under the IRS Fresh Initiative program is definitely worth your while, either on your own or with the assistance of a tax professional. You may find that your overall tax burden is significantly reduced.

Are You Wondering if You’re Eligible and Qualified for the IRS Fresh Start Initiative? Give Our Tax Relief Team a Call.

If you’re struggling with paying your taxes, don’t know how to fill out an Offer in Compromise or don’t know which forms to file, contact our tax relief team today. We’ll help you take advantage of the IRS Fresh Start Initiative.

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IRS Fresh Start Initiative – IRS Offer In Compromise Settlement

The IRS, in 2012, expanded their Offer in Compromise program with its Fresh Start Initiative, to help financially struggling taxpayers who are unable to pay their taxes due to financial difficulties. The Fresh Start Initiative, in addition to providing income tax relief to American taxpayers, also helps the IRS keep a check on the number of tax default cases, as it encourages more taxpayers to settle their old income tax debt so they can resume tax compliance.

What Qualifies You For The Fresh Start Initiative?

The IRS, under the Fresh Start Initiative, provides a number of options to financially distressed taxpayers.

1. IRS Penalty Relief

The Fresh Start Initiative allows eligible taxpayers up to a 6-month extension to pay their taxes. The IRS penalty for not paying income tax debt by April 15 is waived off until October 15. If, however, the taxpayer fails to pay their income taxes beyond the revised date, a penalty is charged.

The IRS penalty relief is available to two categories of taxpayers

  • Wages earning individuals who have been unemployed for a minimum of 30 consecutive days.
  • Individuals who experienced a dip of 25 percent or more in their income due to a slowdown.

Fresh Start Qualification Criteria

If you are married and filing jointly, your adjusted gross income must not exceed $200,000. If your filing status is single, qualifying widower, head of household, or married filing separately, the adjusted gross income must not exceed $100,000. In addition, if you have an outstanding of more than $50,000, you will not be qualified to receive a waiver.

2. IRS Installment Payment Plan

The IRS Installment Agreement provision allows taxpayers to pay their income taxes, in installments, in a scenario wherein the taxpayer is unable to pay in full. It also gives taxpayers more time to pay. The threshold for the maximum amount of debt against which an installment plan can be prepared has now gone up from $25,000 to $50,000, with the maximum term for the repayment of installments being 6 years. Though you need to pay less in penalties, the interest will continue to accrue on your outstanding dues.

Taxpayers can set up an installment agreement with IRS by using the Online Payment Agreement (www.irs.gov) without any intervention of an IRS agent. It is, however, essential that they agree to pay the installments through a direct debit mode.

3. Offer in Compromise (OIC) IRS Settlement

The Offer in Compromise provision allows financially struggling taxpayers to settle their outstanding income taxes for less than what they actually owe to the IRS. After the expansion of “Fresh Start” initiative, it has become easier for taxpayers to qualify for an Offer in Compromise settlement, as the IRS has relaxed the qualification standards, and therefore, more people are now eligible to settle with the IRS for less.

USE AN EXPERIENCED IRS TAX ATTORNEY

To apply for an Offer in Compromise (OIC) settlement, the taxpayer needs to file Form 433-A (OIC) or Form 433-B (OIC), and deposit a non-refundable application fee of $186. If, however, the taxpayer qualifies under the Low Income Certification guidelines, they would not have to pay the application fee. In addition to the form and application fee, the taxpayer may also be asked to pay the first month’s installment or 20 percent of the settlement amount, at the time of filing.

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