The IRS Fresh Start Program consists of several different initiatives that are designed to assist taxpayers who are having a hard time paying their taxes. The program includes leniency provisions such as increasing the threshold for tax liens and expanding the Offer in Compromise program. If you're having trouble paying your taxes, the Fresh Start Program may be able to help you.

How Does Fresh Start Program Works?

The IRS Fresh Start Program was introduced in 2012 to help taxpayers who were struggling due to the economic downturn. The program has been expanded several times since then, with the most recent expansion happening in 2018. The main goal of the program is to help people get their taxes back on track so they can avoid any penalties or interest fees.

One way the IRS Fresh Start Program does this is by increasing the threshold for tax liens. A tax lien is a legal claim that the government can place on your property if you owe back taxes. The IRS can use tax liens to collect overdue taxes from taxpayers. However, under the Fresh Start Program, the IRS will only file a tax lien if you owe $10,000 or more in back taxes. This is an increase from the previous threshold of $5,000.

If you're having difficulties paying your taxes, the IRS Fresh Start Program might be able to help you. Be sure to check with a tax professional to see if you qualify for any of the program's leniency provisions.

The Fresh Start Program offers four main programs to taxpayers:

Installment Agreement

The Fresh Start Program offers a payment plan called an Installment Agreement. This allows taxpayers to pay the IRS an agreed-upon amount every month. These payments go directly toward the taxpayer’s overall tax debt and continue until the debt is paid in full.

An installment plan with the IRS will stop collection letters and penalties from accruing. This is also a great way to demonstrate to the IRS that you want to resolve your debt.

The downside to the Fresh Start Program is that, although your monthly required payment may change, you will still accrue interest on your total debt with the IRS.

Offer In Compromise

The Offer in Compromise or OIC through the Fresh Start Initiative is an agreement that authorizes taxpayers to resolve their tax debt for less than the full amount they owe if it's approved.

The Offer in Compromise is the most impactful way to reduce your tax debt through the Fresh Start Program, but you have to meet some quite strict qualifications option that is only available for people who cannot afford to pay off their entire federal tax debt. And because it's such a beneficial deal, not everyone will qualify.

Currently Non-Collectible Status

The Currently Non-Collectible Status is different than the other three Fresh Start tax programs. Rather than being a form of Fresh Start tax relief, it is only a “status” given by the IRS to taxpayers who cannot pay their taxes.

Even though this doesn't take away tax debt, it does stop any collection activity from the IRS. This comprises bank levies, wage garnishments, tax liens, and letters that threaten legal action. Consequently, Non-Collectible Status gives a taxpayer respite to explore their Fresh Start options without the looming worry of collections Letters coming soon.

If you want your debt to be Currently Non-Collectible, you first need to meet the qualifications of the IRS Fresh Start Program. We will discuss these requirements in more depth below.

Penalty Abatement 

The IRS will reduce or erase a penalty if they consider it to be due to reasonable cause. This is called Penalty Abatement and falls under the Fresh Start tax relief category.

You can ask for Penalty Abatement at any stage of IRS collections: either by visiting a federal IRS campus, through an automated collection system, or by talking to local IRS office staff. Be aware that personnel at only local offices have the power to grant a penalty waiver of $100 or less. Requesting Penalty Abatement costs nothing.

How To Qualify For The IRS Fresh Start Program?

The IRS Fresh Start Initiative is only available to those who qualify. For your tax debt relief application to be accepted, you must show that repaying what you owe would cause major financial difficulty. The outcome of your financial test determines what kind of Fresh Start tax program is available to you.

You, the taxpayer, or the tax relief company you hire is responsible for providing evidence of your financial hardship to the IRS.

Conclusion:

If you owe taxes and are having difficulty paying them, the IRS Fresh Start Program might be able to help. The program includes leniency provisions like raising the threshold for tax liens and expanding the Offer in Compromise program. Be sure to ask a tax professional if you qualify for any of these benefits.