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Tax forgiveness: Are you a good fit for the Fresh Start Program?

Many people are unable to pay their taxes every year, so the government created the IRS Fresh Start Program to reduce their penalties.



The IRS Fresh Start Program is a tax initiative created by lawmakers to help citizens repay their tax debt without facing liens or repossession. Due to a growing number of citizens being unable to pay their tax bills each year, the government has worked on this tax initiative as a way to reduce the penalties and long term financial damage of owing back taxes to the IRS can typically inflict. 

This article will give you a few of the basics surrounding the Fresh Start Program. 

How long has the program been around?

The Fresh Start Program was conceived in 2008 as a response to the recession. In 2012, it underwent several changes to become a program that stuck through the tax code. The goal of both versions is to alleviate the financial hardships on citizens with back taxes. 

How does the Fresh Start Program help alleviate debt?

There are a few ways the program can help eligible taxpayers alleviate their debt. The prime feature of the program is the ability to pay off your tax bill without the threat of liens or repossession. In this program, you can negotiate different paths to financial rectification. For some this is by reducing fees for a year while the taxpayer pays down the debt and for others, its tax forgiveness for certain portions of the debts. 

Who is typically the best fit for the program?

Typically, all applications need to meet one of the following qualifications:

  1. For individuals, your tax debt must be below $50,000. 

  2. For married couples filing jointly, your tax debt must be under $200,000. 

  3. For married couples who are singled filers, the debt must be under $100,000. 

For self-employed individuals, the rules are slightly different. You must be able to demonstrate a deficit in your net income of twenty five percent (or higher). However, these guidelines are not the only restriction applicants must make it through. The IRS does all applications on a case by case basis. 

What are the repayment options? 

Find a professional tax consultant or tax attorney that can help you through the application. (Photo by DepositPhotos)

An offer in compromise. 

Though rare, offers in compromise may be a good fit for taxpayers who will have irreconcilable financial hardships. These cases require the assistance of a tax professional if a taxpayer is hoping to negotiate with the IRS for a portion of their debt to be relieved. 

The IRS looks at 3 points to determine whether or not a taxpayer is eligible for an offer in compromise.

  1. Your financial reality. The IRS has to use their budget wisely. If they determine that settling on a lower amount will net them more pushing through the endless collections loop, they’ll be more likely to honor an offer in compromise. 
  2. The accuracy of your tax records. If you suspect that your tax records are incorrect, the IRS may allow you to prove them wrong. If you can hire a tax professional to prove to the internal revenue service that the amount you owe isn’t what they claim, you may be able to get them to agree to a different price tag on your debt. 

  3. Paying your taxes would break you in every financial way possible. This last option is all the rarer and will likely require the aid of a tax attorney to fight your case. If the Internal Revenue Service determines that paying your taxes will cause long term damage to your life, they may agree to lower the tax bill. 

An extended payment agreement. 

To work with you, the IRS may be able to work on a short term or long term payment agreement that will alleviate fees and penalties. For short term payment plans, the IRS can typically waive setup fees. For long term plans, set up fees are included. 

However, there is a multitude of options you can couple with both plans to conquer your debt. Regardless of the plan you choose, you will need to negotiate with the IRS directly. This must be done through Form 443-F and cannot be submitted online. 

Final thoughts

If you’re curious about the Fresh Start Program, find a professional tax consultant or tax attorney that can help you through the application. Since peeing back taxes can severely damage your credit, it’s vital that you seek to resolve your debt even if the Fresh Start Program isn’t the best fit for you we highly encourage you to reach out the IRS regardless. The show of effort means a lot to agencies like the Internal Revenue Service. It lets them know that you’re serious about your situation and honest about your inability pay. 

(Featured image by DepositPhotos)

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