To assist taxpayers with tax debts but no federal tax liens, the IRS Fresh Start program was established.
The IRS Fresh Start program was introduced by the Internal Revenue Service (IRS) in 2011. To assist taxpayers with tax debts but no federal tax liens, this program developed specific rules (FTLs).
IRS Fresh Start Program Raises FTL Limits
To give first-time offenders a second chance to pay their taxes, the program was created, according to this. The ability to make monthly payments over a six-year period based on the taxpayer’s current income and liquid asset value makes this possible.
The IRS Fresh Start program also raised the $10,000 cap on FTLs from $5,000. When the FTLs limit was eventually raised to $25,000, fewer FIL filings were made. Additionally, the IRS increased FIL withdrawals for taxpayers who signed up for Direct Debit Installment Agreements and increased FTL releases for the purpose of paying off tax debts.
Taxpayers must be able to pay their debts in installments over an extended period of time in order to be eligible for the IRS Fresh Start program, according to the Tax Group Center website. Additionally, taxpayers’ debts must be under $50,000; if they are higher, they must demonstrate how they can repay the majority of the difference.
The debts must also be paid in less than 5 years, and the taxpayer must not have previously missed any IRS tax payments.
Taxpayer must be prepared to submit their taxes on time and adhere to the direct payment structure requirements for the current tax year.
In an effort to help eligible American taxpayers who are currently in debt to the government, the US federal government launched the Fresh Start Initiative back in 2011.
This plan helps struggling taxpayers manage their tax debt while easing their financial burden.
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4 Main Program Options
For tax relief, the IRS Fresh Start Program offers four main options: installment agreements, offers in compromise, currently not-collectible status, and penalty abatement.
It offers taxpayers the option to pay off their debt through a six-year installment agreement plan. Variables like the value of liquid assets and current annual income are used to calculate the total.
According to a press release from the IRS, the program has now been expanded to assist more taxpayers by adopting more lenient Offer-in-Compromise (OIC) terms. Some of the most financially disadvantaged taxpayers will be able to resolve their tax issues thanks to this expansion, possibly more quickly than in the past.
An OIC is a contract that a taxpayer and the IRS enter into to settle the taxpayer’s tax liabilities for a portion of what is owed. In general, the IRS won’t accept an OIC if they think the debt can be settled in full via a payment agreement or a lump sum.
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