If you are owing substantial taxes to the IRS then you need to take action immediately. The IRS offers an IRS Fresh Start Program which helps taxpayers to pay their taxes conveniently. You might be unsure of your eligibility and your alternatives if you’ve learned about the IRS Fresh Start Program for lowering your back taxes. There is already a great deal of false information and confusion regarding this program. Remember, if you have filed an application then you don’t magically resolve all of your back taxes. You may have to understand the Fresh Start Program, its available options and how to go for each option appropriately.
That’s why we have brought you a comprehensive guide of the IRS Fresh Start Program to comprehend. If you want to get rid of your huge penalties, then have a quick review of the Program below.
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What is the IRS Fresh Start Program?
The federal government of America grants relief to certain taxpayers in order to reduce their back taxes. This relief removes the taxpayers’ penalties and interest so they may pay their taxes easily. The IRS has set some standards to become eligible for this program. If you are needy and paying your taxes is really difficult, then the IRS can remove upto 90% of your back taxes.
Moreover, you can also pay your back taxes in installments if you can’t get selected for the removal of your penalties. If you are under back taxes of less than 50,000$, then you may get selected for repayment programs that come under the IRS Fresh Start Program. These repayment programs are as follows.
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Installment Agreement Plan
The IRS Fresh Initiative lessens penalties for taxpayers and offers them repayment choices. Within a six-year period, the taxpayers can repay all of their taxes without incurring any penalties. During that time, they might make installments on their substantial taxes. They may go for three types of installment plans including:
- Short-term Payment Plan: This payment plan allows tax holders to clear their debts within 120 days. If you clear your back taxes using cash, money order or checks then you don’t need to pay extra fee for setup. However, for debit and credit card payments, you need to submit the fee as well. In addition, interest charges will keep increasing until you clear your taxes.
- Long-term Payment Plan: If you can’t clear your taxes within 120 days then you may go for long-term payment plans. These plans may allow you to get agreement plans with different charges for association upto six years.
- Restructuring Or Reinstating An Existing Payment Arrangement: You can amend an old payment plan for an additional $89 cost. You may also become eligible for a $43 fee refund if you meet the requirements for low-income applicants.
To qualify for this programme, the taxpayer’s burden must be lower than $50,000. You can learn more about these additional IRS procedures and the installment agreement by contacting the IRS office or going to their website.
Additionally, another relief is provided to taxpayers in this program by not seizing their wages or assets while they are in installment agreement plan and paying their installments timely. The amount of installments will be determined by the IRS after assessing the taxpayer’s assets and liabilities.
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Offer In Compromise
Taxpayers can pay less than what they actually owe through an offer in compromise. In a letter, taxpayers might offer a sum and persuade IRS agents by outlining their financial situation. The IRS may accept their offer if they are unable to pay their substantial taxes. The OIC of each taxpayer will vary from one another. The reason is because taxpayers are required to pay an OIC percentage based on their assets and valuables.
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Tax Lien Withdrawal
This relief program helps you to free your liened properties. The IRS Form 12277, commonly known as the “Application for Withdrawal,” must be completed in order to request the removal of your tax lien after completing the financial criteria (being able to pay off enough debt to owe the IRS should be less than $10,000). You can also ask for the release of your tax lien using Form 12277 if you agree to pay off your outstanding taxes through a Direct Debit Installment Agreement.
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How To Apply For IRS Fresh Start Program?
It is better to take action than to ignore unpaid taxes once you have discovered that you are accountable for them. The following is how you can apply for the IRS Fresh Start Program.
- Verify that you have filed all of your taxes, both current and back. If not, file them right away to avoid any more fines.
- Visit the IRS’s official website IRS.gov, and use the Online Payment Agreement Tool to select your payment schedule.
- Fill out Form 9465 if you want to apply by mail. Make sure you carefully and accurately fill out the details.
It is advised that you must seek the assistance of tax professionals and delegate your paperwork to them. If you submit an incorrect or incomplete application, they can carefully review it and assist you in correcting the mistakes in order to avoid fines.
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What Are The Qualification Requirements for IRS Fresh Start Program?
Typically, those who are prepared for an installment plan and pay their back taxes within a certain time frame are eligible for a relief programme. You must meet the following requirements in order to be eligible for the IRS Fresh Start Relief programme.
- You must owe no more than $50,000 in taxes.
- All of your most recent taxes have been filed.
- You have filed your prior taxes and have not defaulted on your taxes in the last three years.
- Within a six-year period, you will have enough money to pay your taxes.
- pledging to comply with the conditions of the installment agreement, file taxes on time, and refrain from taking out any new loans while the arrangement is in effect.
- Filing for the approved OIC and paying the settled amount within a year.
If you are a business owner, then you may be qualified for the Fresh Start Program under following conditions:
- Your back taxes should be less than $25,000.
- You should be able to pay back your back taxes within 2 years and 10 months time.
- You have filed all of your current taxes
- Your company has never missed an IRS tax payment deadline before.
Additionally, if you have been jobless for longer than a month, you may qualify for the relief programme. You can also request a six-month extension for filing your taxes.
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What Factors Influence the IRS’s Decision to Accept Your Application?
The IRS will consider your application for tax relief for the following reasons.
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Taxpayer’s Financial Condition
The IRS’s only goal is to obtain the funds. The IRS may provide you some relief if removing any of the penalties enables you to pay your taxes. They might look at your earnings, potential benefits, and liabilities. The IRS may offer a relief programme if you have minimal obligations and earnings and decreasing your penalties allows the IRS to collect something.
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Credibility And Accuracy
There is a potential that your taxes will be much higher as a result of a tax filing blunder. For example, you might have filed joint taxes with your ex-spouse. But, now as you are separated, maybe the IRS is mistakenly charging you taxes for both.
Additionally, there’s a risk that you’re not currently in a position to pay taxes with your recent income as compared to the previous year because of unforeseen accidents or other dire circumstances. The IRS may therefore reexamine your case and reduce your past taxes if they discover any discrepancies. It is advised to seek the assistance of tax experts for these complex situations in order to establish your credibility.
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Compassion And Generosity
If the IRS notices that paying back taxes all at once or garnishing your wages is causing you to sleep on the streets, they may also take you into account for the Fresh Start Program. Since the government cares for its residents, assistance programmes are offered to those who need them.
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In What Ways Is The Fresh Start Programme Monitored And Enforced?
Once you have been granted with the IRS Fresh Start Program then it’s enforced and monitored in the following way.
- Each month’s agreed installment is monitored by the IRS.
- If an agreed installment is not getting paid the IRS can remove the agreement plan and reinstate the full amount of back taxes. You may need to submit all of the taxes at once.
- Terms and conditions for future compliance are already included in the agreement.
Additionally, the IRS codes for the Fresh Start Program are updated annually. Due to this, the taxpayers are required to follow these modifications. These changes may have an impact on their agreement plan and could make it more challenging for them to pay their taxes. Connecting with tax experts and letting them manage your situation is therefore preferable. They may be able to help you out of difficult situations by applying their skills, knowledge, and experience.
