IRS Fresh Start Program
What is the IRS Fresh Start program? The new Fresh Start initiative makes it easier for individual and business taxpayers to pay back taxes, avoid IRS tax liens, and get tax relief from the IRS. Here is what you need to know about how to qualify for the IRS Fresh Start tax relief program. Don’t have time to read? Call us now to speak with our former IRS Agents for FREE 1-714-382-6780.
IRS Tax Liens and the Fresh Start Program
Increase in the Notice of Federal Tax Lien Filing Threshold
One of the biggest improvements in the IRS Fresh Start program is the increase in the IRS Notice of Federal Tax Lien filing threshold. The IRS has increased the minimum liability for filing a tax lien from $5,000 to $10,000. IRS tax liens may still be filed on back taxes below $10,000 when needed, however this change will help protect tens of thousands of taxpayers every year. Since the Fresh Start Tax Lien change is not retroactive, the IRS cannot automatically withdraw a lien that was previously filed based on the old threshold amount.
Requesting a Lien Withdrawal After the Lien Has Been Released
As part of the Fresh Start initiative, the IRS may now issue a “withdrawal” of a tax lien that was previously filed after the lien has been “released”. In general, a lien release occurs after an IRS tax balance is reduced to zero. Although released, the lien still remains on your credit report and other records for approximately seven years. A lien withdrawal will help remove the lien from your records and assist you in repairing your credit score and obtaining future loans. Lien withdrawals must be made in writing using IRS Form 12277 Application for Withdrawal.
Tax Lien Withdrawal After Entering Into a Direct Debit Installment Agreement
If you meet certain IRS requirements for the Fresh Start program, you may qualify to have your IRS tax lien withdrawn after entering into a Direct Debit payment plan. Both individual and business taxpayers may apply for a withdrawal if their tax debt is $25,000 or less. The IRS debt must be paid off within 60 (5 years) months or before the Collection Statute Expiration Date (CSED) expires, whichever comes first. Taxpayers should note that the IRS reserves the right to file a new tax lien and resume collection efforts if a default occurs on the Direct Debit payment plan after the lien is withdrawn.
IRS Installment Agreements and the Fresh Start Program
Streamlined Payment Plans
The Fresh Start program has also made it easier for taxpayers to qualify for an IRS streamlined installment agreement. As a result of the program, the dollar criteria for streamlined payment plans has been raised from $25,000 to $50,000 and the maximum payoff term has been raised from 60 months (5 years) to 72 months (6 years).
Under the IRS streamlined payment plan, debts must be paid within the 72 month payment period or prior to the Collection Statute Expiration Date (CSED), whichever is earlier. As with regular installment agreements, Fresh Start payment plans require a taxpayer to be in current compliance with filing, tax withholding, and/or estimated tax payments.
In-Business Trust Fund Express Installment Agreements
New provisions of the Fresh Start program allow for small businesses who are currently operating and have IRS back taxes to qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). For business taxpayers that owe $25,000 or less at the time an agreement is established, the IRS generally will not require a review of financial statements or proof of expenses. The IRS tax debt must be fully paid within 24 months or prior to the Collection Statute Expiration Date (CSED), whichever comes first.
IRS Offer-in-Compromise and the Fresh Start Program
The IRS Fresh Start Tax Settlement program has made it easier for taxpayers to qualify for an offer-in-compromise and has added more flexibility to the way the agency calculates a taxpayer’s ability to pay when evaluating the IRS settlement application. A Fresh Start debt settlement allows you to settle your IRS back taxes for less than the full amount you owe.
Here’s what you need to know about the Fresh Start offer-in-compromise program:
- To qualify for an IRS tax settlement, the agency will consider your income, expenses, assets, and ability to pay.
- You must be current with all tax return filings and payments.
- You must not be in an open bankruptcy proceeding.
- Your offer amount can be paid one of two ways:
1) Lump Sum Cash Payment – Your first payment must include 20 percent of the total offer amount with your application. If your offer is accepted, the remaining balance is paid in five or fewer payments.
2) Period Payment – Your first monthly payment is submitted with your offer application and you must continue to pay the IRS every month while you offer package is being evaluated. If your offer is accepted, you must pay the remaining balance within 24 months.
- In the event a tax settlement offer is rejected, any initial and subsequent payments made while the offer was being considered are applied to the taxpayer’s back taxes.
- The IRS charges a fee of $186 to process your offer-in-compromise application.
The Fresh Start Offer-in-Compromise program is not for everyone. If you owe back taxes to the IRS and are considering a tax settlement, be sure to contact us for a FREE initial review of your tax situation.
“You appear to have moved mountains. I could not have done any of this without you. My sincere thanks.” - Patricia C.
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To see if you qualify for the IRS Fresh Start Program, contact us today at 1-714-382-6780 for a FREE consultation with our CPAs and former IRS Agents.
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