Many American families may be extremely concerned about managing a sizable IRS debt resulting from back taxes, but fortunately, there is Fresh Start Program that can assist you in doing so.
In 2021, 57 percent of American households were estimated to be unable to pay federal income taxes due to their financial circumstances. The Fresh Start Program is one of the leading programs for debt forgiveness and management.
Fresh Start Program
The IRS Fresh Start Program is intended to assist taxpayers who have managed to amass excessive federal tax debt that exceeds their ability to pay.
By applying and meeting eligibility requirements, taxpayers can significantly reduce their federal tax obligations. The program, which began in 2011, has been immensely popular because, in some cases, taxpayers may be able to reduce their total tax debt by 90 percent or more.
In general, the IRS evaluates each case on an individual basis, and there are no standardized assessment criteria.
In general, however, the Fresh Start Program is available to individuals with a tax debt balance of $50,000 or less and an annual income of less than $100,000. (200,000 dollars for married couples filing jointly).
In recent years, self-employed individuals have experienced a reduction in income of more than 25 percent. The IRS may forgive a taxpayer’s debt if they meet certain eligibility requirements, as debt forgiveness is not a common occurrence.
The criteria include demonstrating that the debt is causing undue financial hardship or that the IRS assessed the debt incorrectly.
In addition, the IRS provides numerous programs and options to help taxpayers manage their debt, including installment agreements, offers in compromise, and currently not collectible status.
The Fresh Start Program is just one way to work with the IRS to reduce the amount of tax you owe in order to gradually repay back taxes.
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How To Apply?
When applying for IRS programs, it is always preferable to provide as much evidence as possible.
When submitting a request by mail, include as much documentation as possible, as it is the best way to demonstrate that you meet the stringent program requirements.
Examples of supporting documents include physician/medical statements, fire department reports, insurance claims, student loan statements, and family members’ death certificates.
In addition, it is recommended that you include a letter with your Form 843 explaining your personal circumstances and why you cannot pay your tax debt.
To qualify for tax relief under the Fresh Start Program, all missing or unfiled tax returns must be filed, estimated tax payments must be current, and current withholdings must be corrected. Moreover, all filings for the last six months must be current or accurate.