What the IRS Fresh Start Program Can Do For You

What the IRS Fresh Start Program Can Do For You

The Fresh Start Program is an umbrella label of several changes instituted into IRS tax laws to help taxpayers and small businesses deal with rising tax debt.  Although it has been active for several years and is fully available for the 2019 tax year, there isn’t any guarantee of how long it will continue.  There are four primary tenants of relief in the program described below.

Higher Thresholds for Tax Liens

The first major change was a raising of the threshold for triggering a tax lien to $10,000 in back taxes.  This essentially means that a taxpayer could choose to not pay their taxes and as long as it stays below the $10,000 threshold, the IRS will not hit them with a tax lien.  However, this does not protect the taxpayer from other collection efforts like wage garnishments. Another advantage is that once a taxpayer pays down their back taxes below the threshold, they can request that the tax lien be removed.

Introduction of Tax Penalty Relief

The major motivation behind the Fresh Start Program, Tax Penalty Relief helps taxpayers deal with excessive tax penalties and offers forgiveness of at least a portion of them.  Owing back taxes has been such a vicious cycle of debt because the punitive tax penalties can be as high as 40%.  This program offers relief from different penalties, including failing to file on time, failing to file at all, failing to pay taxes on time, and failing to make tax deposits, when required.

Easier Access to Installment Agreements

Installment agreements allow a taxpayer to pay back their tax debt over a six-year period without incurring additional penalties.  The criteria for qualifying have been lowered overall, and especially so for those who owe less than $50,000.  For those with balances over $50,000, additional authorization must be applied for.

Expansion of the Offer in Compromise Program

The final change under the Fresh Start Program, and also the biggest change to tax law in decades, is the expansion of the Offer In Compromise program.  Also called a “Tax Forgiveness Program,” it is a negotiation with the IRS to pay back tax debt for less than the balance.  The expansion made it easier for taxpayers to qualify for the program because it gave the IRS more flexibility in analyzing a taxpayer’s ability to repay, expanded eligibility requirements, and simplified paperwork.

These major changes have offered and continue to offer a way out for those hemorrhaging financially, providing tax relief when needed most.  If the Fresh Start Program appears advantageous then a taxpayer should act immediately by contacting a tax professional since these benefits could be rescinded at any time.

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