Owing back taxes can be a stressful and overwhelming experience, particularly when the amount owed is substantial, and the penalties and interest continue to accumulate. To help taxpayers facing financial hardship and struggling to pay their tax debts, the Internal Revenue Service (IRS) implemented the Fresh Start Program. But does this program truly make it easier to settle back taxes?
In this blog post, we will explore the key aspects of the IRS Fresh Start Program and how it can help taxpayers resolve their tax debts.
What Is The IRS Fresh Start Program?
The IRS Fresh Start Program is a series of changes to tax lien and tax debt collection policies designed to provide relief to individuals and small businesses struggling with outstanding tax liabilities. If you find yourself in a difficult financial situation due to back taxes, the IRS Start Program may help you.
The program aims to make it easier for taxpayers to negotiate payment plans or settle their tax debts through various options such as installment agreements, Offers in Compromise (OIC), and penalty relief.
By offering more flexible terms and conditions, the Fresh Start Program aims to assist taxpayers in resolving their tax debts while reducing the financial strain on their lives.
Installment Agreements
One of the primary benefits of the IRS Fresh Start Program is the increased availability and flexibility of installment agreements. An installment agreement is a payment plan that allows taxpayers to pay their tax debt over time in manageable monthly installments.
Under the Fresh Start Program, the IRS has expanded the threshold for taxpayers to qualify for streamlined installment agreements, making it easier for individuals and small businesses to apply.
Furthermore, the program offers longer repayment periods, up to 72 months for some taxpayers, reducing the monthly payment amount and making it more affordable.
Offer In Compromise (OIC)
The Offer in Compromise is a program that allows taxpayers to settle their tax debt for less than the full amount owed if they can demonstrate financial hardship. The IRS Fresh Start Program has made it easier for taxpayers to qualify for an OIC by loosening the eligibility criteria and providing more lenient calculation guidelines for determining a taxpayer’s ability to pay.
Additionally, the Fresh Start Program has streamlined the OIC application process, making it more accessible to taxpayers who previously might not have considered applying for this form of tax debt relief. By offering an opportunity to settle tax debts at a reduced amount, the OIC can be a viable solution for those facing significant financial challenges.
Penalty Relief
Penalties and interest on unpaid taxes can quickly add up, making it even more difficult for taxpayers to get out from under their tax debt. The IRS Fresh Start Program has introduced penalty relief measures to help reduce the financial burden on taxpayers.
For instance, the Fresh Start Program offers the First-Time Penalty Abatement waiver, which allows taxpayers who meet specific criteria to have certain penalties waived or reduced. This can significantly decrease the overall amount of tax debt owed, making it more manageable for taxpayers to repay.
Improved Tax Lien Policies
Tax liens can severely impact a taxpayer’s credit score and financial stability. The Fresh Start Program has made changes to tax lien policies, including raising the threshold at which the IRS will file a Notice of Federal Tax Lien. This means that fewer taxpayers will have liens filed against them, reducing the negative consequences associated with tax liens.
Moreover, the program allows for the withdrawal of a tax lien once the taxpayer has entered into an installment agreement or paid their tax debt in full, further mitigating the impact of tax liens on the taxpayer’s financial situation.
In Conclusion
The IRS Fresh Start Program has made significant strides in making it easier for taxpayers to settle their back taxes. By offering more flexible installment agreements, expanded access to the Offer in Compromise program, penalty relief measures, and improved tax lien policies, the program provides valuable assistance to those struggling with tax debts.
