The Fresh Start Program, also called the Fresh Start Initiative, was made by the Federal Government of the United States in 2011. Some people who owe money to the IRS can get help with their taxes through the Fresh Start Initiative Program.
It is a way for the Federal Government to stop the IRS from taking advantage of people who owe back taxes. The IRS uses compound interest and fines to punish people who owe back taxes.
What Is The IRS Fresh Tax Initiative?
The IRS’s Fresh Tax program attempts to assist people in managing their tax burden. One of the primary purposes of the IRS Fresh Tax program was to prevent aggressive collection techniques, such as financial penalties and tax liens, that the federal government used to penalize people and small companies that owed money to the IRS but had not paid it.
Furthermore, the IRS raised the bar for filing a notice of federal tax obligations. As a result, the IRS Fresh Start initiative enables a more elegant approach to tax debt relief while avoiding tax obligations.
The IRS Fresh Tax program is a breath of fresh air for those of us who have an outstanding tax bill and are already drowning in bills that we can’t pay. Those with tax problems who qualify for the IRS Fresh Start initiative may be able to lower their tax liability by up to 90%. This amount of forgiveness may change people’s lives by helping eligible taxpayers to get back on track financially and start planning for a brighter and more secure future.
How Does The Fresh Tax Program Help People Get A New Start?
The IRS Fresh Start program requires that the IRS will not collect more than taxpayers can fairly pay without jeopardizing their essential requirements such as food, shelter, clothes, and utilities.
The IRS Fresh Start program principles assist in negotiating an arrangement between the IRS and taxpayers who qualify that does not leave them in an undue hardship situation.
Each issue is handled on a case-by-case basis, taking into account the financial status of the persons concerned. The IRS Fresh Start program gives you the option to start again by making it easier to pay down your debts.
Who Is Eligible For The IRS Fresh Tax Program?
Individuals
Taxpayers who qualify for the program are those who are willing to pay their tax burden in installments over a set length of time and according to a predetermined repayment schedule.
If you are an individual taxpayer who is willing to return your obligations in a series of payments using a direct payment system, you may be eligible for the IRS Fresh Start Program.
This arrangement allows qualifying persons to pay their taxes in smaller, more manageable installments over time, with reduced tax penalties. In deciding what you can fairly repay, the IRS will evaluate your ability to pay, current income and costs, and asset equity.
Each choice has a unique protocol, qualifying requirements, and application process. You must satisfy the following requirements:
- You owe $50,000 or more, but you can lower your debts to this amount before beginning the program.
- You may pay off your debts in less than 60 months.
- Your tax return has been filed and is currently available.
- This is the first time you’ve fallen behind on IRS payments.
- You will get into a direct payment installment contract.
- You will maintain the payment arrangement, keep up with tax filings, and will not incur additional tax liabilities while making payments.
- You will apply for OIC and have 12 months to pay down the approved Fresh Start Initiative settlement amount.
- You may also be eligible for a reduction in particular penalties as a first-time debtor.
For example, if you owe less than $25,000 or can lower your obligations to this level before beginning the program, you may be eligible to have a federal tax lien lifted. There are three repayment choices available under the program: an extended installment arrangement, a tax lien removal, and an offer in compromise.
Businesses
If your company owes taxes, you may be eligible for the Fresh Start Program. In this case, you must satisfy the following requirements:
- Your company owes less than $25,000 in debt.
- You will have 34 months to repay the entire sum.
- Your company is currently on federal tax filings and payments.
- This is the first time your company has fallen behind on IRS payments.
- Form 433-A Collection Information Statement for Wage Earners and Self-Employed Individuals is also required.
- For many taxpayers who own small businesses, the qualifying business income deduction can be an effective strategy to minimize their income taxes.
The idea is to make the payments manageable so that you may pay them on time without being burdened financially. Of course, we’ve only scratched the surface of the program.
When Should You Consider A Fresh Tax Program?
If you’re a taxpayer with a big tax liability that you can’t pay off right now, you should read more about the Fresh Start Program. This tax relief program might also assist you if paying down your debt would put you in financial jeopardy. This program will assist you in settling off your tax obligations without putting a burden on your financial position. If you are meeting the eligibility criteria, then you should surely consider the IRS Fresh Tax Program.
How Does The IRS Fresh Tax Program Work?
The Fresh Start Program provides four major initiatives available to taxpayers:
- Installment Contract
- Offer In Compromise
- Currently not collectible.
- Penalty Reduction
What Is An Installment Contract?
Taxpayers can use the IRS Fresh Start Program to pay the IRS a regular monthly payment rather than the entire obligation all at once. Installment plans are available. Taxpayers can make an agreed-upon payment to the IRS every month.
Payments are made as per the taxpayer’s total tax obligation and will continue until it is fully repaid. After you sign up for an installment plan, you will no longer receive IRS collection letters or be subject to penalties.
This approach also shows the IRS that you are serious about paying off your debt. Even if your monthly payment under the Fresh Start Program changes, the IRS will continue to add interest to your total amount. This implies you’ll have to pay more than you previously owed.
What Is An Offer In Compromise?
An Offer In Compromise is a contract between a taxpayer and the IRS that settles all or part of the taxpayer’s tax liabilities. When the IRS refuses to accept an Offer In Compromise, it is typically because they feel they can recover the entire amount in a single sum or through a payment plan.
The IRS determines the reasonable collection potential based on the taxpayer’s income and assets. Offer In Compromises must be accepted under the law.
What Does The Status “Currently Not Collectible” Indicate?
Non-Collectible Status, unlike the other Fresh Start tax schemes, is a status rather than a type of tax relief. If a taxpayer is unable to pay their taxes, the IRS may place them in Currently Non-Collectible Status.
In this status, tax levies, wage garnishment, tax liens, and IRS collection notifications are all forbidden. A taxpayer must be in Currently Non-Collectible Status to get Fresh Start tax relief without intervention from the IRS.
What Is Penalty Abatement?
Penalty Abatement is also known as Fresh Start tax relief by the IRS. A sort of penalty mitigation is penalty abatement. However, the IRS will only give Penalty Abatement if there is a valid basis.
A list of IRS locations where you can request Penalty Abatement can be found on the IRS website. Penalty abatement can also be requested by interacting with IRS officials at a local office.
Penalty abatement can be requested at any IRS collection level, including a local IRS office. A local IRS office, on the other hand, may only give a Penalty Abatement of up to $100. Making a request for Penalty abatement is completely free.
How To Apply For The IRS Fresh Tax Program?
You can apply for the Offer in Compromise by visiting https://www.irs.gov/payments/offer-in-compromise.
Without appropriate documentation, the IRS will not accept a request for tax assistance under the Fresh Start Initiative. You should Include as much supporting evidence as possible when mailing your request to avoid the chances of rejection. The greatest sort of proof against the severe IRS Fresh Start Program rules is documentation.
You must include a letter stating why you are unable to pay your outstanding tax liability with your Form 843. During the application process, you may be required to produce the following paperwork to your local IRS office:
- Statements of student loans
- Claims for insurance
- Doctor remarks and medical records
- Certificates of birth and death for direct family members
- A personal letter explaining your circumstances and why you are unable to pay your outstanding tax
Finally, all of your tax filings must be cleared to qualify for the Fresh Start initiative’s advantages. That means you must begin completing unfiled or incomplete tax forms and ensuring your existing withholdings and anticipated tax payments are proper to have a fresh start.
Conclusion
Thousands of delinquent taxpayers who are struggling to make up their tax arrears will benefit significantly from the IRS Fresh Tax initiative. The removal of tax liens under the conditions of this program can assist many filers in maintaining or obtaining jobs that will allow them to pay off their bills in full. To know more about it, you can explore the IRS Fresh Start program website.
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