Who Qualifies for the IRS Fresh Start Program: The Guide to Tax Debt Relief

Are you struggling to pay your tax debt? If you are struggling with tax debt, you may be wondering if there is any help available. Yes, there is! The IRS Fresh Start program provides assistance to taxpayers who are unable to pay their taxes in full. This program offers a number of benefits, including lower monthly payments and interest rates, and the ability to get caught up on past-due taxes over time. In this article, we will discuss who qualifies for the IRS Fresh Start Program and what benefits are available.

Eligibility conditions for the most common features of the program include the extended installment contract, Offer in Compromise (OIC), and two sorts of tax lien relief. Each of these tax debt solutions has its own set of criteria that we will look at further below.

 

1. Extended installment contract

To be eligible for an extended installment contract, you must owe less than $50,000 in combined tax, penalties, and interest. Furthermore, the total amount you can pay each month cannot exceed 25% of your monthly disposable income. Your monthly payment will be based on your ability to pay and the term of the contract will be no longer than six years.

 

If you meet the eligibility requirements for an extended installment contract, this may be your best option for resolving your tax debt. An extended installment contract allows you to make smaller monthly payments over a longer period of time, which can help ease the financial burden.

 

2. Offer in Compromise

The Offer in Compromise program allows taxpayers to settle their tax debt for less than the full amount owed. To be eligible for an OIC, you must meet a number of conditions, including:

 

  • You must owe $150,000 or less in combined tax, penalties, and interest
  • Your total monthly expenses (including rent, utilities, food, and other essential living expenses) must be less than 25% of your monthly disposable income.
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  • The IRS must believe that you can pay the amount offered in full within five years
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  • You have not previously received an Offer in Compromise from the IRS

In case you meet all of these conditions, you may be a good candidate for an Offer in Compromise. This program can provide significant relief by reducing the amount you owe on your taxes.

 

3. Tax lien relief

 

There are two types of tax lien relief available through the IRS Fresh Start program: release and subordination.

 

The release of a tax lien allows you to sell or refinance your property without having to worry about the IRS taking back the proceeds from the sale. The IRS must agree to release the lien before the sale can take place.

 

Subordination of a tax lien allows you to keep your property, even if the IRS has a lien on it. In order to qualify for subordination, you must meet two conditions:

 

The amount you owe must be more than the fair market value of your property The installment agreement payments must be current

When you meet these conditions, the IRS may subordinate their lien to a new mortgage or other debt. This can be helpful if you are having difficulty refinancing or selling your property.

 

4. Monthly payment plan

 

If you are not eligible for any of the programs listed above, you may still be able to get caught up on your taxes through a monthly payment plan. To qualify for a monthly payment plan, you must owe less than $50,000 in combined tax, penalties, and interest. Your monthly payments will be based on your ability to pay and the term of the plan will be no longer than 72 months.

 

A monthly payment plan can help you get back on track with your taxes by allowing you to make smaller, more manageable payments. It is important to note that interest will continue to accrue on any unpaid tax debt, so it is important to stay current with your payments.

 

Conclusion

 

The IRS Fresh Start program provides a number of options for taxpayers who are struggling to pay their taxes. If you meet the eligibility requirements, one of these programs may be able to provide significant relief. Contact an experienced tax attorney today to see which program is right for you.

Best regards,


Kenneth Morris, EA


Call me: (678) 641-3193