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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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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