What is the IRS Fresh Start Initiative?
The IRS Fresh Start Initiative is one of those rare moments where the Government utilizes good foresight. Actually, it’s good marketing. The whole idea behind the Fresh Start Initiative is to help struggling taxpayers that owe back taxes.
If you owe the IRS more than you can afford, you can rack up all types of penalties for failing to pay taxes. The burden can be crushing for some. Penalties happen to be one of the biggest factors facing anyone who is behind on their taxes.
The IRS Fresh Start Initiative gives taxpayers a six-month extension to get their taxes up to speed. Interest will still apply, but people won’t face any penalties due to failure-to-pay.
IRS Fresh Start Initiative – Watch This Short Explainer Video
IRS Fresh Start Initiative Qualifications
The IRS Fresh Start tax program is available to everyone, however, there are some basic requirements in order to qualify.
To be eligible for the IRS Fresh Start Initiative:
- Those who are self-employed must be able to prove a reduction of 25% in net income.
- Those who are single filers cannot earn over $100,000 annually.
- Those who are joint filers cannot earn over $200,000 annually.
- Your tax balance must be under $50,000 before the year ends.
You must also fill out form 1127A, and the form can be found on www.irs.gov, or you can call 1-800-829-3676 and you must apply based on the option that you think is appropriate based on your situation. The IRS will not apply the Fresh Start program to your tax debt simply because you qualify.
About Installment Agreements
You can arrange to make installment agreements as a payment option if you can’t pay your bill by its due date. It’s a good provision of the IRS Fresh Start Initiative and allows you to streamline payments to catch up on their back taxes. It also gives you more time to pay. On a note, there’s a new threshold of $50,000, up from $25,000. There’s far less burden placed on the taxpayer because limited financial information is only required, and the minimum term for such installed agreements has been raised to six years.
Just keep in mind that if your debts are greater than $50,000, it is a requirement to provide the IRS with a Collection Information Statement. This is form 433-F or Form 433-A. Some choose to pay their balance down to $50,000 to qualify for this option. This might all seem a little bit in left field, but I work with clients all the time on these things.
Offer in Compromise
The Offer in Compromise covers a large group of taxpayers struggling to pay their tab. This is an agreement made between you and the IRS that works to help settle your tax debt. The goal is to pay less than the full amount of taxes that you owe. You have to give the IRS credit for giving taxpayers a break. They know that people are struggling to pay their bills.
IRS Offer in Compromise – Watch This Video to Learn the Three Different Types
Your income and other assets will be taken into consideration on whether you can likely pay your debt.
Yes, it’s kind of hard to believe the IRS can market but they do a pretty good job of it with the Fresh Start Initiative. When it first came out a lot of people were skeptical about it. I mean, after all, it was direct from the IRS. It was kind of hard to believe the IRS was going to go easier on taxpayers after being tough for the previous 14 years or so. This represented a whole new direction of slack for taxpayers who owed back taxes.
Other IRS Changes
The IRS has made some good changes. For instance, simpler cases are passed on to lower-level employees so that faster decisions can be made. Not that I’m trying to stereotype the situation, but this is what’s happening. Other cases with high-dollar value are kicked up the ladder to more experienced and higher ranking IRS officials. They, of course, are more experienced and have lots of knowledge.
Some IRS agents are even working out of their home snow. It’s accepted and no longer a big deal. Just be aware of that if you hear a dog barking in the back. don’t just jump to the conclusion that a scam is in the making.
More on Installment Agreements
The IRS Fresh Start Initiative has opened up the door wide for installment agreements to take shape. Before 2012, you could pay back $25,000 within a five-year period without having to provide detailed financials.
There’s a benefit in not having to provide detailed financials. If your financials showed that you had a disposable income of $2000 a month, you would have to pay, monthly, the amount of your disposable income. That left nothing for taxpayers to buy groceries or gas with.
The rules now adjust to fit what people can pay in an affordable and reasonable manner. There’s something left over in your paycheck after you make your IRS payments. And that’s a good thing.
It’s a win-win for everyone if it takes the IRS longer to deep dive into financials to review tax returns. It’s also a win-win if they can get what’s owed within a five-year period. This removes stress from a lot of people. They’re not looking back over their shoulders like the paddy wagon is right around the corner.
Should You Hire a Tax Attorney?
Well, I think you should. And here are a few logical reasons.
Contrary to what some people believe, you to have rights as a taxpayer. In fact, I’m sure you have rights that you don’t know exist.
For instance, if an IRS rep visits you in person, you’re under no obligation to answer any questions. You can smile, ask for their contact information, and tell them you’re hiring a tax attorney. Tell them your attorney will contact them directly. This is one way of ensuring that your rights remain protected.
An expert tax attorney can help you work out the best installment plan possible. Once a tax attorney is on the scent, an IRS agent will seldom pressure an individual.
There are flexible programs if you owe between $10,000 and $20,000. Offer in Compromise (OIC) is one such program. Partial payment installments, various payment plans, reduction of penalties, and non-collectible status are just a few of these programs.
The average person may not know these things, but a qualified tax attorney will. Every plan mentioned has its own unique processes and qualifications. An experienced tax professional can help you navigate the concourse. You’ll get the best options available.
If you’re being audited, it helps knowing an expert is willing to represent you. It matters. I know that the IRS will ask intrusive questions in an initial interview. How a person answers those questions will invariably decide their fate.
A qualified tax attorney like myself can help you decide the best course of action. Believe me, going it alone is not something you’ll ever want to experience. Walking away with the best deal is the only way to approach the matter.
The IRS Fresh Start Initiative is like anything in life. If it’s worth doing—it’s worth doing well. I tell people this all the time, and I also tell people not to worry themselves to death. As long as you work with someone like myself who knows how to work with the IRS, anything may be possible.
Always look for good things, and don’t let fear stop you from paying the tab. I work with people who’ve gone decades without paying taxes. These people look over their shoulders almost every waking moment of the day. If you have a tax problem, call our office at (813) 295-7648 and let’s set up a time for us to chat together about it.
Stay tuned. There’s always more helpful information on the way.