Thousands of people deal with tax issues and end up in tax debt. Whether intentional or unintentional, obligations toward the IRS can be stressful and concerning; this gets even worse if they levy or lien on your assets. The IRS Fresh Start Programs have been designed to give taxpayers another opportunity to clear their tax debts.
The program offers assistance to achieve financial stability by reducing or eliminating tax payments. This blog is to explain all about the Fresh Start Program and what benefits it provides to the taxpayers.
How does the IRS Fresh Start Program work?
The Internal Revenue Service (IRS) Fresh Start Initiative is a lifesaver for people and organizations drowning in tax debt. This program provides relief options and processes for taxpayers to regain financial footing. The Program has several initiatives designed to help taxpayers struggling with tax debts to the IRS and any financial difficulties.
This program provides tax reliefs, penalty reliefs, temporary delays in payments, and different instalment payment plans according to the person’s needs and present financial situation. People with difficulty covering their basic needs and expenses and who cannot protect their taxes and tax debts with those expenses can take advantage of this tax relief program.
With this initiative, taxpayers can get rid of their debts and escape any tax liens, bank levies, jail time, or any threatening letters from the IRS. The IRS is more than happy to gain something from the Fresh Start initiatives rather than being empty-handed.
The primary criterion for evaluating the amount of tax collection under this program is the taxpayer’s financial position. The IRS is not permitted to collect more than the person can pay. So, the IRS Fresh Start Program assists in reaching an arrangement between the taxpayer and the IRS and deciding the amount the taxpayer can afford to pay.
This blog lists the benefits taxpayers can avail of by joining the Fresh Start Initiative and ending tax debts.
Benefits you get by being a part of the Fresh Start Initiative
- Installment Agreements
Installment agreements allow taxpayers to pay off their tax debts to the IRS in smaller, affordable monthly payments. These are applied directly to the taxpayer’s tax obligation and continue until the debts are fully paid. This initiative is the most popular among all the Fresh Start Programs. The eligibility level has also been raised to allow more taxpayers to benefit from this agreement.
Once set up on an instalment payment agreement, the IRS does not send any threatening tax collection letters and does not levy any fines on the taxpayers. This agreement is also an excellent way to prove to the IRS that you agree to settle your tax debts without fraud.
- Offer in Compromise
Another option is the Offer in Compromise (OIC), which helps qualified taxpayers settle their debts for a fraction of the total amount they owe to the IRS. Only the IRS can evaluate and approve an Offer in Compromise.
If you are eligible to qualify for an OIC, this is the best out of all the initiatives because it cuts down and reduces your debt to ease your finances. Criteria for eligibility, as set by the IRS, are a little strict. They are usually saved for people in a critical financial situation and do not have the resources to pay their tax debts ultimately. Having a reputed tax debt relief organization in your court can significantly increase your chances of obtaining an OIC.
- Penalty Relief
For taxpayers with penalties against the IRS, the penalty relief Fresh Start program can benefit them. Whenever taxes are not paid or delayed, specific penalties are imposed that increase the amount of debt they owe.
The Penalty Relief Initiative allows taxpayers with a satisfactory compliance track record to request that their tax penalties be eliminated or reduced. The IRS only offers penalty abatement in case of a valid basis and helps lower the total amount of the debt.
Without any additional charges, the taxpayers can request penalty abatement at any level of IRS collections, and the IRS evaluates the eligibility of the candidates for penalty relief. The IRS only can offer a maximum of $100 penalty relief to taxpayers.
- Currently Non-Collectible Status
The Currently Not Collectible Status can be availed in times of financial hardships, and the taxpayers can put their tax debts on hold until they recover from their financial situation. To qualify for this program, taxpayers must prove to the IRS that they do not have a disposable and consistent income to pay their tax debts. This puts the taxpayers in the Currently Not Collectible Status and delays their obligations.
As soon as the taxpayer is put into the non-collectable status, the IRS cannot pursue and immediately must stop any actions they are taking against collecting taxes from that person.
- Lien Withdrawals
A tax lien comes into the picture when you have a tax payment to the IRS that is neglected and unpaid. The IRS can then file a government document to assert legal rights on your property.
The Fresh Start Program helps people with these federal tax liens. Taxpayers can enter a debit instalment plan, and after completing certain payment milestones or paying off the debt entirely, they can request their tax liens to be dismissed. This helps taxpayers improve their financial position and credit scores.
Conclusion
The IRS Fresh Start Programs provide different and considerable benefits so that the maximum number of taxpayers can benefit from them. However, taxpayers must support themselves with evidence and meet eligibility criteria to qualify for relief.
The program offers so many different options to choose from. So, take advantage of the Fresh Start Program, consult with a licensed professional, and choose your path to financial stability.
