Have you ever wondered what the New Start Initiative is all about and how you could benefit? Nobody falls behind on their taxes on purpose; owing the IRS is often the result of several unfortunate circumstances coming to a head simultaneously. The most common reasons for owing back taxes are changes that make it challenging to pay off your original balance, such as divorce, reduction in income, or job loss. And once the notice comes in the mail, it can seem like just another blow in a losing fight.
Our perceptions of the IRS are mostly shaped by word of mouth. Many Americans perceive the IRS as an inexorable, monolithic organization bent on getting their due one way or another. In truth, they are a fair creditor and want nothing more than delinquent taxpayers to return to good standing. To facilitate this, they have instituted several programs over the years aimed at getting down-on-their-luck taxpayers back on their feet. Chief among these programs is the Fresh Start Initiative.
What is the Fresh Start Initiative?
The Fresh Start Initiative is an IRS tax relief program designed to help struggling taxpayers pay off their balances and get back on their feet. Since its launch in 2011, this initiative provides a multi-pronged approach to achieve a “fresh start”:
- It allows taxpayers to set up installment agreements that make paying a balance more manageable over time, rather than requiring them to pay the amount in full.
- Another possibility within the Fresh Start Initiative is to secure an Offer in Compromise (OIC), which ultimately reduces the amount of taxes you owe to the IRS.
- The last component of the Fresh Start Program includes the ability to file for a tax lien withdrawal. A federal tax lien gives the federal government the authority to seize your property or other assets to resolve your tax debt. By filing for a tax lien withdrawal, you can potentially have a lien removed, provided that you meet specific requirements. The Fresh Start Initiative also increased the amount a taxpayer must owe before they can be served with a tax lien.
Qualifying for the Fresh Start Program can be complicated, but it’s certainly worth exploring. The tax experts at Community Tax are here to help — from application to acceptance, we will work with you to find the best method to find the best tax debt relief method for your needs.
What are Installment Agreements?
If you owe back taxes to the IRS but cannot pay off the balance in full, you may qualify for a unique repayment plan that makes resolving your tax debt much more feasible. Installment agreements simply break down your total balance into manageable monthly payments spread out over time, typically over 72 months. In certain circumstances, the IRS may eliminate late payment and interest penalties as part of the installment agreement.
To qualify for an installment agreement, taxpayers must meet the following criteria:
- Owe less than $50,000 in back taxes (including interest and penalties).
- Filed all required tax returns for current and previous tax years.
What is an Offer in Compromise (OIC?)
An Offer in Compromise (OIC) is one of the most effective ways to settle up tax debt. This solution allows taxpayers to resolve tax debt for less than the original balance owed. To qualify for an OIC, taxpayers must demonstrate that they cannot pay the full balance, are not liable for the amount due, or that paying the entire balance would result in financial hardship.
How is an Offer in Compromise paid? There are three ways that taxpayers can pay off their balance with an OIC agreement:
- Lump-sum payments must be paid off in five installments.
- Short-term periodic payments must be paid off within 24 months.
- Deferred periodic payments must be paid within the agreed statutory period.
Even though the IRS has provided these programs, they don’t effectively market them; many taxpayers who struggle with tax debt are simply unaware that help is available. And because the IRS can be pretty opaque, many taxpayers do not know whether they can take advantage of these programs. In stressful times, the best thing you can do is trust a professional. Community Tax has helped thousands of clients re-enter good standing with the IRS by holistically examining their financial records and achieving a resolution through back-and-forth negotiation directly with the agency.
If back taxes have you down, a better future is possible. Schedule a free consultation with Community Tax today to achieve your fresh start!