First, the burden of knowing you owe money, and second, the fear of accruing penalties and interest, can weigh heavily on you. But, you’re not alone in this. Approximately 11.23 million Americans owe over $125 billion in back taxes to the IRS (the number is growing fast).
But there’s a way out! The IRS Fresh Start Tax Program can help you reduce your debt significantly. You can keep more of your money where it belongs—right in your pocket.
Let’s say you manage to save 40% or more through an Offer in Compromise within a single financial year. This means you’ve achieved a significant reduction in your tax burden, freeing up thousands of dollars.
Thus, before it’s too late, keep reading to start fresh and reclaim the money that would otherwise be headed straight to the IRS.
What is the IRS Fresh Start Program?
If you’re asking, “How to reduce taxes owed?” the IRS Fresh Start Program might be your answer. The IRS Fresh Start Program was launched by the Internal Revenue Service (IRS) to help taxpayers get back on their feet.
It’s designed to make it easier for individuals and small businesses to pay back taxes and avoid harsh penalties. Originally launched in 2011, the program offers several options to ease the burden of tax debt, allowing taxpayers to resolve their issues without the looming fear of aggressive IRS collection actions.
With a clear understanding of what is the IRS Fresh Start Program?’ let’s move on to how it works and the relief options you can access.
How Does the IRS Fresh Start Program Work?
The IRS Fresh Start Program provides a range of relief options designed to help struggling taxpayers manage and reduce their tax debt. Here’s a closer look at how it works and the specific options available:
1. Installment Agreements
The Fresh Start Tax Program offers easier access to Installment Agreements, allowing you to pay your tax debt over time in smaller payments. This can be a lifeline if you’re dealing with a significant tax burden but can’t pay it all at once. The program has relaxed the qualification rules, meaning more people are now eligible.
This is particularly helpful for those facing a notice of intent to levy, as setting up an installment plan can stop the IRS from seizing your assets.
2. Offer in Compromise (OIC)
An Offer in Compromise (OIC) is an option that allows you to settle your tax debt for less than the original amount, provided you can demonstrate financial hardship. This form of hardship tax relief is ideal for those who cannot realistically pay their full tax bill.
The IRS reviews your income, expenses, and overall financial situation to determine if you qualify. It’s worth noting that the OIC process can be complex, and knowing when to hire a tax lawyer can keep you in good standing with the IRS.
3. Penalty Relief
The IRS imposes penalties for various tax issues, such as late payments or filing, which can significantly increase the amount you owe. However, under the Fresh Start Program, the IRS may offer tax forgiveness credit by waiving certain penalties.
You’re only eligible if you can show that you’ve made a genuine effort to pay your taxes or if circumstances beyond your control prevented you from doing so.
4. Lien Withdrawal
If you’ve received Letters 1058 and LT11, addressing them promptly is essential to protecting your asset. The Fresh Start Program allows for lien withdrawal from your credit report once you’ve paid off your tax debt or entered into a direct debit installment agreement.
This can make it easier to secure loans or credit in the future, effectively restoring your financial reputation.
Eligibility Requirements for the IRS Fresh Start Program
The IRS Fresh Start Tax Program is designed to help individual taxpayers and small businesses who are struggling to pay their tax debts. To meet the IRS Fresh Start Program requirements, you must qualify under one or more of the following criteria:
- Self-Employed Individuals: If you’re self-employed and have experienced a significant drop in income—at least 25%—you may be eligible.
- Income Limits for Single Filers: If you are single and your income is less than $100,000, you can apply.
- Income Limits for Married Filers: If you are married and your combined income is less than $200,000, you are eligible.
- Tax Debt Amount: If your total tax debt is less than $50,000, you qualify for the program.
Is the Fresh Start Program Legitimate?
Yes, the IRS Fresh Start Program is legitimate. It’s an official initiative by the IRS to help taxpayers struggling to pay their tax debt. While the program offers real relief, be cautious of third-party companies that may exaggerate what the program can do.
It’s important to deal directly with the IRS or consult a professional tax consultant who can use their insider knowledge to steer through any problem on your behalf.
Now that we are confident that the answer to Is the Fresh Start Program legit? is yes, the next step is understanding how to apply for it effectively.
How to Apply for the IRS Fresh Start Program?
Applying for the IRS Fresh Start Tax Program involves several steps:
- Assess Your Tax Situation: Determine how much you owe and what you can realistically afford to pay.
- Choose the Right Option: Depending on your financial situation, decide whether an installment agreement, Offer in Compromise, or another option is best for you.
- Submit the Necessary Forms: For an Offer in Compromise, you’ll need to submit Form 656 and Form 433-A (OIC). For an installment agreement, use Form 9465. Please make sure you apply the right form on the right occasion. Ensure all your tax returns are up to date.
- Negotiate with the IRS: Be prepared to discuss your financial situation and provide documentation to support your case.
Whether you’re looking to fully grasp What is the IRS Fresh Start Program? or need guidance on how to apply, the experts at Best Tax Pro are here to assist you every step of the way.
Final Thoughts
Getting your case accepted by the IRS isn’t easy, but it’s possible.
While the IRS was more lenient during the COVID-19 pandemic, 2024 might bring tighter enforcement, especially with inflation still squeezing wallets.
If you have these common misconceptions about the Fresh Start Program, then you should know what is a “myth” and what is a “fact” before making informed decisions.
- Myth: All tax debt is eliminated.
- Fact: The program reduces eligible tax debts but doesn’t erase them.
- Myth: You don’t need to file current taxes.
- Fact: You must remain compliant with current tax obligations to stay eligible.
To wrap up, you should know that you can potentially lift the heavy burden of tax debt off your shoulders and work towards financial stability.
