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The IRS Fresh Start Program, What is it?

The IRS Fresh Start Program, what is it? If you’re dealing with a tax problem, you’ve most certainly heard the radio, viewed TV ads, and Facebook advertising acclaiming the IRS Fresh Start Initiative. But what exactly is the Fresh Start Initiative, and can it help you get tax relief?

About the IRS Fresh Start Initiative

The Fresh Start IRS Program is not new. It goes back to 2011 when these newly designed rules focused on taxpayers who owed back taxes but had no federal tax liens filed (FTLs) against them.

The Program was originally designed to give taxpayers with a first-time tax debt a second chance to start over, and it included:

  • Raising the dollar amount that triggered Federal Tax Liens being filed from $5,000 to $10,000 initially and then to $25,000 a few months later. These changes quickly resulted in fewer FTLs being filed.
  • Making it easier to obtain an FTL release once the debt was paid off.
  • Withdrawing FTLs more frequently when an individual taxpayer entered into a Direct Debit Installment Agreement (DDIA).
  • Making Installment Agreements (IAs) easier to obtain for small businesses.
  • Streamlining and expanding the qualifications of the Offer-In-Compromise (OIC) program to make it easier to qualify and use for more taxpayers.

In 2012, the IRS expanded the Fresh Start Initiative, making it available to even more taxpayers. Revisions included:

  • An easing of how the IRS calculated a taxpayer’s future income when considering an OIC.
  • Expanding what types and amounts of expenses (including allowable living expenses, student loans, and state and local tax debts) the IRS would consider reasonable and relevant when determining how much a taxpayer could afford to pay on a monthly basis.
Who qualifies for the IRS Fresh Start Initiative?

Individual taxpayers who will accept paying their tax debt over time through an installment agreement with a direct payment structure can benefit from using the IRS Fresh Start Initiative when:

  • They owe less than $50,000 or can pay a larger liability down to that amount.
  • They can pay off the remaining debt in 60 months or less.
  • It’s the first time falling behind on tax payments with the IRS.
  • They agree to the direct payment installment agreement
  • Their tax filings are up to date through the most current tax year.
  • They maintain the installment agreement, stay current with tax filings, and don’t incur new tax debt during the period the installment agreement is in effect.
  • They file for an OIC and can pay the agreed settlement amount off within 12 months.
If a taxpayer can qualify for the IRS Fresh Start Initiative, certain bonus items may also come into play:
  • If they owe less than $25,000 or can pay their initial liability down below that amount, they may be eligible for the withdrawal of a federal tax lien.
  • A first-time tax debtor is also eligible for an abatement of specific penalties under these revised guidelines.

For businesses, the IRS Fresh Start regulations are applicable when:

  • The business owes less than $25,000 and can be paid within 34 months.
  • The business is current with federal tax filings and payments.
  • It’s the business’s first time falling behind on tax payments with the IRS.

In addition, as a bonus for qualifying, the business may qualify for the abatement of specific penalties.

If you have a tax debt and are looking for relief, you can take the worry out of dealing with the IRS by contacting us Let’s find out if you qualify for the Fresh Start Initiative.