IRS Tax Relief Programs - IRS Fresh Start Program Helps Taxpayers Who Owe the IRS
Updated: Apr 18, 2019
IRS FRESH START PROGRAM - IRS TAX RELIEF PROGRAMS
The IRS Fresh Start program (#offerincompromise) makes it easier for taxpayers to receive IRS tax relief by paying back taxes and avoid federal tax liens. Even small business taxpayers may receive IRS tax relief and benefit from Fresh Start. Here are three important features of the IRS Fresh Start program:
Federal Tax Liens. The Fresh Start program increased the amount that taxpayers can owe before the IRS generally will file a Notice of Federal Tax Lien. That amount is now $10,000. However, in some cases, the IRS may still file a lien notice on amounts less than $10,000. When a taxpayer meets certain requirements and pays off their tax debt, the IRS may now withdraw a filed Notice of Federal Tax Lien. Taxpayers must request this in writing using Form 12277, Application for Withdrawal. Some taxpayers may qualify to have their Federal tax lien notice withdrawn if they are paying their tax debt through a Direct Debit installment agreement. Taxpayers also need to request this in writing by using IRS Form 12277. If a taxpayer defaults on the Direct Debit Installment Agreement, the IRS may file a new Notice of Federal Tax Lien and resume collection / enforcement actions such as wage garnishments, bank levies, etc.
Installment Agreements. The Fresh Start program expanded access to streamlined installment agreements. Now, individual taxpayers who owe up to $50,000 can pay through monthly direct debit payments for up to 72 months (six years). While the IRS generally will not need a financial statement, they may need some financial information from the taxpayer. The easiest way to apply for a payment plan is to use the Online Payment Agreement tool at IRS.gov. If you don’t have Web access you may file Form 9465, Installment Agreement, to apply. Taxpayers in need of installment agreements for tax debts more than $50,000 or longer than six years still need to provide the IRS with a financial statement. In these cases, the IRS may ask for one of two forms: either Collection Information Statement, Form 433-A or Form 433-F.
Offer in Compromise. The Offer in Compromise (#IRSsettlementagreement) program available to a larger group of taxpayers.. An Offer in Compromise is an IRS settlement agreement that allows taxpayers to settle their tax debt for less than the full amount. The IRS Fresh Start Initiative expanded and streamlined the Offer in Compromise (OIC) program. The IRS now has more flexibility when analyzing a taxpayer’s ability to pay. This makes the Offer in Compromise the ultimate IRS settlement program.
Generally, the IRS will accept your Offer in Compromise if it represents the most the IRS can expect to collect within a reasonable period of time. The IRS will not accept an Offer in Compromise if it believes that the taxpayer can pay the amount owed in full as a lump sum or through a payment agreement. The IRS looks at several factors, including the taxpayer’s income and assets, to make a decision regarding the taxpayer’s ability to pay.
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