The IRS Fresh-Start Program is an initiative that makes it more convenient for individuals and organizations which owe taxes to the IRS to not only pay back taxes but also avoid unpleasant tax liens. It’s a great initiative that consists of three main elements; tax liens, installment agreements and offers in compliance. The parties that stand to benefit from this program are;
- Taxpayers who wish to avoid Federal Tax Lien Notices.
- Taxpayers who wish to pay through Direct Debit payments every month, for a period of six years.
- Taxpayers who are interested in settling their tax debts for much less than the whole amounts owed to the IRS.
The amount of taxes that a taxpayer may owe the IRS before it (IRS) can officially file a Federal Tax Lien Notice has been increased from the initial amount to US $ 10, 000. However, in exceptional circumstances, the IRS may still file a notice of lien on amounts that are less than the prescribed US $ 10,000.
If a taxpayer chooses to pay all tax debts owed to the tax authority, any Federal Tax Lien Notice that had already been filed against the taxpayer may be withdrawn. This is only applicable if the taxpayer first meets certain requirements set by the authority. Additionally, the taxpayer must submit an official written request using the Application for Withdrawal- Form 12277.
Taxpayers who are in the process of paying their tax debts through Direct Debit installment agreements may also meet the qualifications to have their respective lien notices withdrawn. Each of them must also file an official written request using the Application for Withdrawal- Form 12277.
IRS has the authority of filing new Federal Tax Lien Notices and also resume collection actions against taxpayers who default on the Direct-Debit installment agreements.
According to the Hillhurst Tax Group the initiative has effectively enhanced access to rationalized installment agreements. Individual taxpayers who are required to pay taxes amounting to US $ 50, 000 are at liberty to pay through Direct Debit payments every month, for a period of six years/seventy-two months.
In such cases, the IRS may not necessarily request taxpayers to submit their financial statements. However, the authority may need certain important information that must be provided upon request.
Using the Online Payment -Agreement tool which is available at IRS.gov is the most convenient way of applying for a plan of payment. Alternatively, a taxpayer can apply by submitting the Installment Agreement -Form 9465 (if a taxpayer can’t access the IRS.gov platform).
Offers in Compromise
This is an agreement which gives taxpayers the freedom of settling their tax debts for much less than the whole amounts owed to IRS. The Fresh-Start Program expanded and also streamlined the Offers in Compromise arrangement.
IRS is now more flexible when analyzing the ability of a taxpayer to pay taxes. Additionally, Fresh-Start Program has effectively made the Offers in Compromise arrangement available to more taxpayers.