The IRS Fresh Start Program is much advertised to eliminate tax debts, but does it work that way? We will explore what this program is and is not and how it may help you.

What is the IRS Fresh Start Program?

In 2011, the IRS announced a new initiative to help individuals and small businesses struggling with their tax liabilities. The requirements were further relaxed, in 2012, to help assist a larger number of taxpayers. Since then, the initiative has continued but has been quietly swept under the rug by the IRS. The press releases and videos that had been published explaining the program has since been taken down. But while the main initiative has been downplayed, the results are still in place.

How does the Fresh Start Program Help?

There were a few significant ways that the Fresh Start initiative helped taxpayers:

  • Federal Tax Liens are only triggered by a debt of $25,000 or more, up from the original $5,000 limit.
  • Once the debt is paid off, it is now easier to get a release from a Tax Lien.
  • Tax Liens are more likely to be withdrawn if the taxpayer enters into a Direct Debit Installment agreement.
  • The Offer-in-Compromise program was streamlined and expanded.
  • More types of expenses were included in the Offer-in-Compromise income calculation. They increased the amounts of some allowable expenses.

The Fresh Start initiative focuses on reducing the number of Tax Liens and expanding the Offer-in-Compromise program.

Who qualifies for this program?

The most direct benefit of this program comes from the changes in the Offer-in-Compromise program. A taxpayer still has to qualify for the Offer, but the calculation is now more relaxed than previously. To qualify, you must meet the following requirements:

  • Not in the process of filing for bankruptcy,
  • Must have filed past returns,
  • If you own a business, it must be current on all tax deposits, and
  • Not under criminal investigation by the Department of Justice.

How can I learn more?

We will explore Offer-in-Compromises more in future posts. In the meantime, if you are struggling with unpaid tax liabilities, contact us today to find the right solution for you.