Dealing with the IRS can be stressful, especially if you owe back taxes. Fortunately, the IRS introduced the Fresh Start Program to help taxpayers catch up on their tax responsibilities without facing overwhelming penalties or aggressive collection actions. In this article, we’ll explain what the Fresh Start Program is, who qualifies, and how it can help you resolve your tax debt.
Understanding the IRS Fresh Start Program
The IRS Fresh Start Program was originally launched in 2011 as a series of policy changes designed to ease the burden on taxpayers struggling to pay back taxes. The program helps individuals and small businesses by making it easier to:
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Pay off tax debt over time
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Avoid tax liens
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Settle tax debt for less than the amount owed
The goal of the program is to provide more flexible options to get back in good standing with the IRS without pushing taxpayers into financial hardship.
Key Components of the Fresh Start Program
1. Installment Agreements
If you can’t pay your tax debt in full, the IRS may allow you to make monthly payments through an installment agreement. The Fresh Start Program raised the threshold for streamlined installment agreements from $25,000 to $50,000, and extended the payment period up to 72 months.
Benefits:
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No financial statement required for debt under $50,000
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Set up directly through IRS Online Payment Agreement tool
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Interest still accrues, but collection actions are paused
2. Offer in Compromise (OIC)
An Offer in Compromise lets you settle your tax debt for less than you owe. It’s ideal for taxpayers who can’t afford to pay their full tax liability or doing so would cause financial hardship.
The Fresh Start changes made OICs more accessible by:
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Expanding eligibility criteria
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Streamlining the application process
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Using a more realistic calculation of a taxpayer’s ability to pay
Note: Not everyone qualifies. The IRS considers your income, expenses, asset equity, and ability to pay.
3. Tax Lien Relief
The Fresh Start Program increased the threshold for filing a federal tax lien from $5,000 to $10,000. It also made it easier to withdraw a tax lien after you’ve entered into a Direct Debit Installment Agreement and have a history of on-time payments.
This can help:
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Protect your credit score
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Make it easier to apply for loans or housing
4. Penalty Relief
In certain cases, the IRS may offer penalty abatements if you can show reasonable cause for failing to file or pay taxes on time. The Fresh Start initiative expanded access to these waivers for first-time offenders.
Who Qualifies for the IRS Fresh Start Program?
Eligibility for the Fresh Start Program depends on your financial situation and the specific relief option you’re pursuing. In general, you may qualify if:
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You owe less than $50,000 in tax debt
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You’re able to repay your debt within six years
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You’re current with all tax filings
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You agree to make payments via direct debit (for some options)
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You can demonstrate financial hardship (for OIC)
How to Apply for the Fresh Start Program
Here’s how to get started:
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File all missing tax returns – You must be compliant before the IRS will negotiate.
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Check your tax balance at IRS.gov.
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Choose a repayment option – Installment Agreement, OIC, or other.
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Submit the necessary forms:
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Form 9465 for installment agreements
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Form 656 for Offer in Compromise
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Financial documentation (Forms 433-A or 433-B) if needed
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Stay compliant – Continue to file and pay your taxes on time while enrolled.
Final Thoughts
The IRS Fresh Start Program is a valuable option for taxpayers who have fallen behind but want to make things right. Whether you’re dealing with a temporary financial hardship or a long-term inability to pay, the Fresh Start initiative offers multiple paths to help you reduce or eliminate your tax debt in a manageable way.
If you’re unsure which option is best, consider working with a tax professional or calling the IRS directly to explore your options.
Need Help with Tax Debt?
Get personalized advice and guidance from a tax relief expert to find out if you qualify for the Fresh Start Program today.