What Is the IRS Fresh Start Program?

Tax Resource

Written by Tax Relief Systems

Last Updated

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Owing back taxes to the IRS may feel like a constant weight on your shoulders. Fortunately, you have several options for remedying your situation — even if you owe the government several thousand dollars. Read through the following guide to learn more about the IRS Fresh Start Program and apply as soon as possible if you qualify for this unique opportunity.

What Is the IRS Fresh Start Program?

The IRS Fresh Start Program is a means of allowing taxpayers to pay back their debt to the IRS. This program was created to make tax repayment easier by implementing the following guidelines:

  • It increases the minimum Federal Tax Lien level to $20,000. This means that if you owe back taxes of $20,000 or less, your property will not immediately be claimed by the government.
  • After you pay back your taxes, any current liens are released within 30 days.
  • Both individuals and small businesses may qualify to pay back their debts with convenient installment agreements.

How Do I Pay My Taxes if I Qualify for the Fresh Start Program?

There are three types of payment structures possible under this program. You may be able to agree to pay your debt in installments, file to have your lien withdrawn and pay in full, or file for an “offer in compromise” agreement.

An offer in compromise qualifies you to pay back less than what you originally owed to the IRS. You may qualify for this if you do not have the ability to pay, have a low income, or have extremely high expenses. It’s a good idea to work with a tax attorney who can help you file an airtight offer of repayment.

Who Qualifies for the Fresh Start Program?

You may be anxious to learn whether you qualify for this program. Consider whether you meet the following criteria:

  • You have filed any outstanding taxes or debts.
  • You do not yet have a lien filed against your account, and if you do, you have plans to withdraw the lien (if your debt is within certain limits) and instead file for a repayment plan.
  • You have a debt of less than $50,000.
  • You are able to pay back the debt in a reasonable amount of time (usually around five years).

How Do I Apply and Increase My Chances of Success?

It’s possible to work with the IRS to settle your outstanding debt. When you file your request for the Fresh Start Program, will need to send records of your loan statements, taxes, insurance claims, and any other documentation that allows the IRS to understand your situation. Take the following steps when applying to the Fresh Start Program:

  • First, consult an attorney: If you have any concerns or uncertainty about your situation, it’s a good idea to set up a meeting with a qualified tax attorney who can walk you through the particulars. Keep in mind that you won’t be able to set up any type of repayment plan with the IRS if you have not filed all of your taxes.
  • Next, file any outstanding taxes: If you owe a significant amount of money in back taxes, you may be afraid to file at all. Don’t worry. Professionals at the IRS would rather you file now and learn that you have back taxes to pay off than audit you in the future — because when they do, they could impose strict penalties for tax evasion including hefty fines or jail time.
  • Finally, pay what you can: You’re likely seeking assistance in the form of the Fresh Start Program because you are unable to pay all or most of your back taxes. This is fine. For now, pay what you can to decrease your debt.

Frequently Asked Questions About the Fresh Start Program and Tax Repayment

Tax trouble is a scenario that most people would rather avoid. In this case, though, it’s important to face the problem head-on to prevent it from becoming worse. Take a look at the answers to these FAQs that commonly arise when considering the fresh start program.

1. What Happens if I Negotiate With the IRS by Myself?

There’s no issue with speaking to the IRS alone, but in some cases, it’s not ideal to negotiate repayment by yourself. Unless you have a background in finance and tax law, it may be difficult to understand all of the options available to you.

A licensed tax attorney, on the other hand, can help you make sense of your individual predicament — instead of giving you options that could apply to a general situation — and he or she will be able to walk you through the process to avoid other legal pitfalls.

2. What Is a Tax Lien?

Entering the tax negotiation process means that you will likely come across a slew of terms, definitions, and abbreviations that you’ve never encountered before. A federal tax lien, which applies directly to your situation, is an important concept to understand.

In essence, a lien is a claim filed by the government that means that they owe some or part of your property. The Fresh Start Program is available to taxpayers with a large amount of debt — but it’s only appropriate for those with no liens filed against them.

3. Is a Lien the Same as a Levy?

No. According to the IRS, a lien is simply a claim on your property that the government files when you do not pay your taxes. A levy, on the other hand, is a much more serious situation in which the government can seize property and assets if you do not pay your tax debt.

Regardless of how much you owe, it’s best to try to settle your tax debt before a levy happens. The Fresh Start Program allows a way out of a bad situation before it turns into a lien and potentially a levy.

4. Is There a Maximum Tax Balance To Qualify for the Fresh Start Program?

Yes. You can apply for the Fresh Start Program if you have back taxes that total $50,000 or less. If you have more, or if your taxes are business-related, there may be other government programs you can take advantage of.

5. What Happens if My Spouse Qualifies for the Program But I Don’t?

If your spouse qualifies, you automatically qualify too. The term often used is innocent spouse relief, which indicates that your spouse had errors on his or her tax return (or several thousand dollars worth of back taxes) that you didn’t know about. You can file for this so you are not solely responsible to correct these errors.

6. What if I Can’t Pay Any of My Taxes?

If you owe the IRS several thousands of dollars in back taxes, you may wonder if filing for bankruptcy is a quicker solution than considering the Fresh Start Program. Sometimes, bankruptcy is appropriate, while at other times, it’s better to work with the IRS to pay back your debt over time. Your tax attorney will be able to recommend the right solution for your situation.

7. Are There Fees Attached to the IRS Installment Plans?

If you choose an installment, plan, you’ll have six years maximum to repay your back taxes. If you stick to the schedule given to you for repayment, there aren’t any extra fees attached to the Fresh Start Program. Keep in mind your ability to repay and work with your tax attorney to determine the right schedule for yourself and your family.

Get in Touch To Learn More

Are you ready to take the next step and apply to the IRS Fresh Start Program? Perhaps you need more information, or maybe you wish to speak with a qualified professional who has a solid understanding of the system.

Remember, it’s always better to have a tax attorney on your site when you speak to the IRS. Schedule a free consultation with Tax Relief Systems. We’re on your side, and we’re ready to help you deal with the details of your tax situation today.

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