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If you’re behind on tax filings, it’s best to first reach out to a tax professional to get back on track on filings before actually beginning the negotiation process with the IRS.

The withholding amount on the most recent return must also be accurate to be eligible for a program under the Fresh Start Initiative. To qualify for the Fresh Start Initiative, the IRS requires you to be current on your tax filings. How Do You Qualify for the IRS Fresh Start Initiative?

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Licensed tax professionals can advise you on how to navigate these applications with the IRS. They are, however, willing to release penalties based on certain criteria such as your first time falling behind or reasonable cause for falling behind. They typically will add a late-filing penalty, late payment penalty and then interest on top of each of these penalties. The IRS can add a seemingly massive amount of additional penalties and interest to late tax debts. For example, if you are paying your tax debt through a Direct Debit installment agreement, owe less than $25,000 in total, and are on track to pay it off in under 60 months, the IRS may release a lien. But under the Fresh Start Initiative, you can request a lien release if you’ve paid what you owe in full, or meet other requirements. If you owe back taxes, the IRS could file a tax lien against you. You should also have filed all required returns and be current on estimated tax deposits (if self-employed) before applying for an installment agreement. The terms are generally negotiated for you by a tax relief firm. Extended-Term Payment Plan: This arrangement is determined by your income, liabilities, and expenses the IRS classifies as allowable per the national standards of living.Businesses that owe $25,000 or less could be eligible for a 24-month installment agreement if they owe $25,000 federal tax.Individuals who owe $50,000 or less could be eligible for a 72-month installment agreement if they meet certain criteria.Individuals who owe $25,000 or less could be eligible for a 60-month installment agreement if they meet certain criteria.Installment Agreementīelow is a breakdown of installment agreement options offered by the IRS: The Offer in Compromise is a complicated and lengthy process, and acceptance is most readily achieved with the help of licensed tax professionals. Only a percentage of OIC’s submitted to the IRS are actually accepted, but if you qualify this can be a great resolution strategy.

An OIC is an agreement between the IRS and the taxpayer to settle unpaid tax debt for a percentage of the total outstanding balance. You could qualify for an Offer in Compromise if you’re experiencing financial hardship due to lack of income and lack of assets. To apply for any of these options, the IRS will require you to complete and submit certain tax forms and supporting documents to see if you qualify. There are three core offerings in terms of tax resolution options under the Fresh Start Initiative – Offers in Compromise, installment agreements, penalty abatements and tax lien releases. How Does the IRS Fresh Start Initiative Work? The Fresh Start Initiative can also help shield you from bank levies or wage garnishments. Individuals and small business owners can use these programs to break their back taxes down into manageable pieces to avoid being overwhelmed when repaying what they owe, if certain criteria are met. It’s not a single program to help taxpayers get relief but moreover a set of various resolution options available through the IRS for resolving back tax debt issues. What is the IRS Fresh Start Initiative?įormerly known as the Fresh Start Program, the Fresh Start Initiative gives you different options to get a handle on past-due tax debt.

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