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What is the IRS Fresh Start Initiative?

In 2012, the Internal Revenue Service (IRS) introduced the Fresh Start Initiative program to help taxpayers struggling to pay their debt due to unemployment and other financial difficulties. If you qualify for the Fresh Start Initiative, you can request an extension of six months without the risk of accruing new penalties. However, the IRS will assess penalties if you don’t file a return and pay the amount due by October 15 of the year you were approved for the program. This program provides taxpayers with a different installment structure that allows them to avoid tax liens and additional federal reviews. Read on to find out how our prior experience as former IRS agents can help you.

Qualification Requirements for the Fresh Start Initiative Program

You must meet the following qualifications in order to apply for this IRS tax debt relief program:

  • You were unemployed for a minimum of 30 days during the last tax year or before April 15 of the current year
  • If you are married, only one spouse needs to meet the qualifications to apply
  • The income limits for the program are $100,000 for individuals and $200,000 for married couples
  • If you are self-employed, you must submit documented proof that you have had at least a 25 percent drop in your income for the previous tax year
  • You must owe less than $50,000 in taxes and penalties

If you meet all of these qualifications, you must complete IRS Form 1127-A entitled Extension of Time for Payment of Income Tax Due to Undue Hardship.

Federal Tax Liens and the Fresh Start Initiative Program

Although it can be difficult to qualify for this program, there are benefits for those who do. The Fresh Start Initiative raises the dollar amount a taxpayer must owe before the IRS files a federal tax lien. This is to ensure that the amount is realistic as it relates to inflation rates. A federal tax lien gives the IRS the right to profit from the sale of your property before other creditors whom you may also owe money can profit, such as a bank.

In addition to delaying the issuance of a federal tax lien, this program makes it easier for delinquent taxpayers to have the IRS formally withdraw the lien. You can request this once you have paid your tax debt in full. The IRS feels that this new streamlined process is in its own best interests, as well as those of struggling taxpayers.

Since the government strongly prefers to receive its funds through direct bank account debit, it offers extra incentives to taxpayers who choose to pay their debt this way. These include withdrawing liens for people who initially enter into a direct debit arrangement, as well as those who change their method of payment after having been in the program for a while. Upon request, the IRS will withdraw a tax lien from individuals who paid by direct debit before this program was established.

Installment Agreements and Offers in Compromise

The Fresh Start Initiative program makes it easier for small businesses to pay past-due taxes by allowing those with balances due up to $25,000 to participate. Business owners must agree to a direct debit arrangement and pay the debt in full within 24 months. Another change is that taxpayers can now earn incomes up to $100,000 and still be eligible to apply for an offer in compromise.

Don’t Face the IRS Alone

Many Enrolled Agents at Yarborough IRS Tax Debt Relief are former federal agents and are exceedingly experienced in evaluating the program you qualify for and exploring the options that work best for you personally. Since many of our staff members are former IRS agents, they know how to propose an offer that is fair to you and that will also satisfy the IRS. Although you probably feel overwhelmed, the worst thing you can do is ignore the problem. The staff at Yarborough is here to help you find the best solution to settling your overdue tax bill. Contact us today to start towards a tax-debt-free life.