The IRS Fresh Start Program: How Does It Work?

If you are having trouble paying your tax debt, you may have heard about the IRS' Fresh Start initiative as a way around the challenge and wondered whether you could use it to ease your tax debt situation. But what exactly is the Fresh Start program, and how does it work?

The IRS Fresh Start Program was designed to help taxpayers who are struggling to pay their taxes. The program offers several different options for taxpayers who want to get caught up on their payments. In this article, we will discuss the Fresh Start Program in detail and determine whether or not it is effective.

The Fresh Start program is intended to help taxpayers pay their taxes off in six years and with zero financial strain. It's open to anybody who owes the IRS $50,000 or less in tax debt.

The Fresh Start program offers two options; the extension of the payment period and the ability to pay back taxes without interest or penalties. Extending your deadline is a great way to get relief from IRS collections, but it can also mean that you need to pay more money in the long run.

The extension is only available if your tax debt is less than $50,000 and you are able to make payments for five consecutive years without missing any payments or paying late fees on those payments. The IRS will set the new deadline at six months from the date you accepted the offer.

If you don't qualify for the extension, you can still apply to have your penalties and interest waived. This is a great option if you are unable to make any payments on your debt.

The Fresh Start program has been effective for many taxpayers who were struggling with their tax debt. If you are having trouble paying taxes or have already filed for bankruptcy, you may want to consider the Fresh Start program as an option.

You can learn more about this topic by visiting the IRS's website at irs.gov/faq and searching "Fresh Start." To find out if you qualify for either of these programs, call the IRS at 800-TAX-FORM (800-825-3676).

How The Fresh Start Initiative Works

1. Simplification

The initiative simplifies and shortens the procedure for having liens and levies removed after taxes have been paid--which was previously a very time-consuming and unpleasant process. Taxpayers can now have these excised within 30 days of making a request once their outstanding tax debt has been resolved.

This and the preceding provision were intended to alleviate the enormous negative influence that tax liens might have on a taxpayer's credit report. When a lien was canceled, it was effectively erased from the taxpayer's credit history.

2. Installments

The installment agreement procedure was also streamlined and made less onerous. The new rules allow the IRS to accept monthly payments for up to six years, rather than the previous limit of five years. This is intended to provide more breathing room for those who cannot pay their full debt at once but want to make some progress in paying it down.

4. 30-Day Extension Of The Statute Of Limitations

If a taxpayer files for bankruptcy, the statute of limitations on collection is suspended until the bankruptcy is resolved. This will result in an automatic extension of the time available to collect taxes from the taxpayer who has filed for this type of protection.

The new rules extend this suspension period to 30 days. This gives the taxpayer a bit more breathing room to get their financial affairs in order.

5. Uncollectible Status

The new rules also provide that a taxpayer who has been deemed to have an "uncollectible status" is not required to pay interest or penalties during this period. This means that the IRS will not be collecting any outstanding taxes for which there is no collection action being taken. The taxpayer does, however, remain liable for the taxes.

This provision is designed to help taxpayers who have fallen on hard times and are unable to pay their tax obligations. The IRS has recognized that, in some cases, it is more beneficial to them not to pursue collection actions than it is to try to collect a debt that cannot be repaid.

Conclusion

The Fresh Start program was introduced in 2012 to give struggling taxpayers a second chance at repaying their taxes. It was intended as an alternative to filing bankruptcy and defaulting on your tax debts.

At Morris and Associates Tax Specialists, we have agents who are in right standing with the IRS and in a position to help you out with your tax debt situation. Give us a call at (678) 641-3193 and let us see how we can help you.

Best regards,

Kenneth Morris, EA

Call me: (678) 641-3193