Fresh Start Program
What is the Fresh Start Program?
In the words of the IRS:
“The goal is to help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers. Specifically, the IRS is announcing new policies and programs to help taxpayers pay back taxes and avoid tax liens.”
Some of the highlights of the Fresh Start program are:
- It created the Stream-Lined Installment Agreement “SLIA”. This allows taxpayers to set up a payment plan with less paperwork.
- It increased the maximum amount for a streamlined installment agreement from $25,000 to $50,000. It also allows you to pay down your debt below $50,000 to qualify for a SLIA. Keep in mind this is with ‘limited’ financial information. Although interest continues to accrue, this was intended to allow more people into the plan by minimizing the paperwork necessary to qualify.
- It increased the maximum term for SLIA from 60 months to 72 months.
- It expanded and streamlined the Offer in Compromise program to include a broader range of eligibility.
- It allows for Penalty Abatement in certain cases, such as unemployed taxpayers.
- Increased to $10,000, the amount a taxpayer owes before the IRS files a Notice of Federal Tax Lien. It is important to note that is some cases the IRS may remove a tax lien. The form to do this can be found here: https://www.irs.gov/pub/irs-pdf/f12277.pdf?_ga=1.68670033.1736408826.1480743540
What is the difference between the Fresh Start Initiative and an Offer in Compromise?
The Fresh Start Program and the Offer in Compromise program are linked inherently. The Fresh Start Initiative changed several elements of IRS collection and settlement procedures. As noted, it made it easier to get a payment plan, it extended the term of a payment plan, it made the Offer in Compromise easier in many ways, it eliminated liens for small balance accounts.
On the other hand, the Offer in Compromise is simply the option to settle your debt for less than you owe, sometimes much less.
Who is the Fresh Start program intended for?
It was intended to help taxpayers who face the most financial hardship.
"We have an obligation to work with taxpayers who are struggling to make ends meet," said IRS Comminssioner Doug Shulman. "This new approach makes sense fo taxpayers and for the nation's tax system, and it's part of a wider effort we have underway to help stuggling taxpayers."
What aspects of tax settlement are easier with the Fresh Start initiative?
1. Installment Agreements that allow for minimal paperwork.
2. Longer term for repayment.
3. Offer in Compromise has more flexibility.
4. Lien release is easier.
5. Penalty abatement in certain cases.