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What Is the IRS Fresh Start Initiative?

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what is the irs fresh start initiative

The IRS Fresh Start Initiative Program is a program offered by the Internal Revenue Service (IRS) to help taxpayers who are struggling to pay their federal taxes.

This program offers a variety of options which can help make paying back taxes easier, such as payment plans, penalty relief, and more. The goal of this program is to provide taxpayers with more flexible monthly payment options so they can better manage their tax debt.

Additionally, the program also helps to reduce the amount of money owed through installment agreements and offers financial hardship waivers.

In order to apply for the IRS fresh start initiative tax program, taxpayers must meet certain criteria such as providing proof of your inability to pay the tax bill, and filing all required tax returns within the last five years. This program is an excellent way for taxpayers to get back on track with their taxes and avoid any further consequences from the IRS.

IRS Fresh Start Initiative vs. IRS Fresh Start Program: Is There a Difference?

The IRS Fresh Start Initiative and the IRS Fresh Start Program are both initiatives by the IRS to help taxpayers who find themselves in difficult financial situations.

The Initiative is focused on helping taxpayers with back taxes, while the Program is more focused on helping those who have an agreement with the IRS for their tax situation.

Both offer assistance and guidance to taxpayers that may not be able to meet their current tax obligations due to a change in their financial situation.

The key difference between the two is that the Fresh Start Initiative offers a variety of options such as payment plans, offers in compromise, and tax lien withdrawals, while the Fresh Start Program only allows for payment plan agreements. However, both initiatives provide tax debt relief for taxpayers who cannot pay their taxes.

What Are the IRS Fresh Start Initiative Qualifications?

The IRS Fresh Start Program qualifications require that you owe the IRS money in the form of taxes and are unable to pay the taxes owed in a lump sum.

In order to qualify for tax debt relief, All past due tax returns must be filed and your tax balance must be no more than $50,000. You must be financially unable to pay off the debt to the IRS. You will also have to be able to make payments to the IRS on a monthly basis. Finally, you will need to provide financial documentation and based on your income and expenses in order to setup an installment agreement with the IRS.

The IRS believes that if they offer you an Installment Agreement, then you will be able to pay off your tax debt within 72 months. If approved for this program, the IRS will continue to charge interest and penalties on the unpaid balance until you pay the tax debt in full. Additionally, you may also need to provide proof of income and expenses when applying for this program.

How does the IRS Fresh Start Program work?

The IRS Fresh Start Program is designed to help taxpayers who are having difficulty paying their taxes. The program provides a variety of options, including payment plans, offers in compromise, and penalty relief.

A fresh start initiative settlement helps taxpayers spread out their tax debt over time and make manageable payments each month where an offer in compromise allows taxpayers to settle their debt for less than the full amount owed and must be paid in a lump sum payment.

Penalty relief can be requested if a taxpayer has reasonable cause for not paying their taxes on time or not filing their taxes at all. The taxpayer will have to provide documentation and proof showing they are unable to pay, depending on the documents, the IRS may work with the taxpayer to resolve the debt in a way the taxpayer can pay.

The IRS Fresh Start Program also includes other features such as expanding the range of payment options available to taxpayers and increasing access to education programs about tax compliance. Ultimately, the goal of the program is to provide relief and assistance to taxpayers who have fallen behind on their taxes so that they can get back on track with the IRS.

What Is An Installment Agreement With The IRS?

An installment agreement with the IRS is a payment plan that allows taxpayers to avoid IRS collection and pay off your tax debt in manageable monthly payments over time.

This type of agreement can be used for both individuals and businesses who owe federal IRS taxes, and it provides an alternative to paying the full balance due immediately.

It allows taxpayers to negotiate a payment schedule with the IRS that fits within their budget and pays off the entire amount owed in full over time. Generally, taxpayers must provide financial information to prove they cannot afford to make the full payment at once, and they will have to pay interest on any unpaid balance.  

This particular tax relief program can be used as a way to avoid a federal tax lien and tax levies. The tax payer will need to work with a tax specialist or contact the IRS to determine if the program is available for their situation. Once an agreement is made with the IRS, the monthly tax payments will need to be made each month. If a single payment is missed or in some cases late, the IRS has the right to terminate the agreement and start the collection process.

What Is an Offer In Compromise?

An Offer In Compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service (IRS) that allows the taxpayer to pay off their taxes for less than their full tax bill. This can be due to a financial hardship / inability to pay, or because it is unlikely that the IRS would be able to collect the full amount owed.

An OIC may be accepted if it meets certain criteria, such as reasonable collection potential and equity. Depending on the situation, an OIC could reduce a taxpayer’s debt by up to 80%.

To apply for an Offer In Compromise, taxpayers must submit a complete application including their financial information. The IRS uses your income, assets, and expenses to determine the settlement amount and will make a decision regarding whether or not acceptance of the OIC is appropriate.

Should You Hire A Tax Professional?

While it’s possible to work with the IRS on your own, a certified tax professional will help you get your taxes done right as well as potentially reduce your tax burden. This can be especially beneficial if you are just starting the program and need assistance with filing taxes to the IRS.

If you owe money to the IRS and are considering whether or not to hire a professional, it is important to weigh the pros and cons.

  • Experience – Tax Professionals are experts at tax resolution and know the exact steps to navigate the IRS.
  • Speed – Trying to resolve tax issues on your own is time consuming, A tax specialist does this daily and can get it done in a short amount of time
  • Savings – Many people can reduce their federal tax debt by hiring a specialist to help with their tax filings. A professional will review your tax liabilities and determine exactly what the tax payer can pay before negotiating with the IRS.
  • Peace of Mind – A tax professional is a mediator between the taxpayer and the IRS. Instead of spending time trying to figure out if you are eligible for the fresh start initiative, a tax expert will quickly tell you if you qualify for the program. They will also provide tax help and inform you of the best way to pay your tax debt.
  • Cost – There are upfront and potential ongoing costs involved in hiring a professional. However, It’s not really a con since they may end up saving you more money in the long run by reducing the taxpayer’s overall tax debt.

Working with a tax professional can help those who owe back taxes, pay their tax debt in an efficient manner. Professional tax resolution firms can help make sure that you are getting the maximum savings on your total tax bill. A professional will review your returns and help resolve tax problems that you may not have been aware of previously.

Ultimately, when dealing with the IRS and tax debt, hiring a tax professional will ensure you get the best deal available.

If you would like to speak to a tax specialist to discuss your options, Give us a call at 877-860-3731 for a free 15 minute consultation.