What’s the IRS Fresh Start Program?

The IRS Fresh Start Program was designed to help taxpayers with delinquent tax liabilities to both pay back their taxes, and avoid any liens being filed against them. The Fresh Start Program made changes to Installment Agreements, Offers in Compromise (OIC), and tax lien filings.

Change One: Taxpayers now have 12 more months to pay back tax liabilities

Federal Installment Agreements: Under the Fresh Start Program, qualifying taxpayers now have 72 months (6 years) to pay back their outstanding tax liabilities. This is up from 60 months (5 years), under the previous rules. Taxpayers who owe between $25,000 and $50,000 and can meet the payment terms may also only need to provide limited financials. In the past, only taxpayers who owed less than $25,000 were eligible to set-up an installment agreement without providing financials. By implementing these changes, the Fresh Start Program has made it easier for a larger number of taxpayers to set-up installment agreements under more favorable terms.

Change Two: The IRS expanded and streamlined the OIC process

Offers in Compromise: For OICs, the IRS expanded and streamlined the process under the Fresh Start Program. Under this new program, Offer Specialists at the IRS have more flexibility in accepting an OIC. The IRS attempted to take a more common sense approach to the offer analysis, so that it more closely resembled the real-life situation of the taxpayer. Some of these changes include: allowing an expense for student loan and delinquent State tax repayment, revising how future income was calculated, and increasing allowances for business taxpayers with income producing assets.

Change Three: Taxpayers who owe less than $10,000 will not be filed a lien

Federal Tax Liens: Under the Fresh Start Program, the IRS has increased the threshold amount of taxes owed to $10,000. This means that in most cases, if a taxpayer owes less than $10,000, the IRS will not file a lien.

Under this program, the IRS has also instituted an option for having a previously issued tax lien withdrawn, before the underlying tax is paid in full. Based on the amount owed, taxpayers on a direct debit installment agreement may be able to request that their lien be withdrawn.

Being able to avoid a lien, or have a previously issued lien withdrawn can be incredibly beneficial to a taxpayer. Liens can greatly reduce a taxpayer’s credit score and prevent a taxpayer from selling or refinancing property

Through the Fresh Start Program, the IRS is attempting to make it easier for qualifying taxpayers to resolve their outstanding debt with the IRS.

To find out whether you qualify for this program, contact us at 877-829-2455 to schedule a initial consultation.