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IRS Fresh Start Initiative

The Internal Revenue Service (IRS) began the IRS Fresh Start Initiative in 2011 to help taxpayers who were struggling to pay their Federal taxes. As the name suggests, the IRS Fresh Start Initiative (also known as the IRS Fresh Start Program) helps taxpayers resolve their IRS tax liabilities and move on with a “fresh start” in their lives.

The Hillhurst Tax Group has helped many taxpayers get such a “fresh start” and settle their tax issues with the IRS with beneficial results. With the aggressive representation provided by the Hillhurst Tax Group, you can best take advantage of the IRS Fresh Start Initiative in a favorable manner.

 

What is the IRS Fresh Start Initiative Program?

In May of 2012, the IRS announced changes to its Fresh Start Initiative that benefited taxpayers who owe tax debt. The new changes made the tax debt collection process less harsh while increasing thresholds for collective action. The Fresh Start Initiative affects several areas of tax relief including, speed of tax resolution, lien thresholds, terms, and conditions, and Offer in Compromise (OIC) income and tax debt limitations.

Before the 2012 changes, if a taxpayer owed $5,000 in tax debt, the IRS would issue a lien against that taxpayer. With the recent changes, the lien threshold has been doubled to $10,000. An IRS lien is issued against the taxpayer and is meant to, “protect the government’s interest in all your property, including real estate, personal property and financial assets,” as stated by the IRS website. This means that if the IRS issues a levy– the actual seizure of your property to pay your tax debt– they can take possession of your home or rental property, personal property such as a car, and financial instruments such as your 401(k) or IRA accounts to satisfy your tax debt. When the IRS issues a lien against a taxpayer, it simultaneously issues a Notice of Federal Lien which can be found on your credit report, preventing you from taking out any new loans and signaling to all of your current debtors that the IRS tax debt takes priority over the debts you owe to them. The increase in the IRS lien threshold amount is a step in the right direction that will make tax resolution less painful and time-consuming for many taxpayers with relatively small tax debt.

Additionally, the new rules state that once a taxpayer who owes less than $25,000 enters into an installment agreement to pay their tax debt, the IRS will remove the lien filed against the taxpayer if the taxpayer requests it. Another area greatly impacted by the new rules involves Offers in Compromise (OIC). Prior to recent changes, strict income and tax debt thresholds limited certain taxpayers from participating in the OIC tax relief program. The changes provide that taxpayers making up to $100,000 a year with tax debt of $50,000 or less can apply for an OIC. Other changes to the tax collection procedures included the following:

  • Revising the calculation for the taxpayer’s future income.
  • Allowing taxpayers to include repayment of their government-backed student loans when figuring OIC.
  • Allowing taxpayers to include repayment of state and local delinquent taxes when figuring OIC.
  • Expanding the Allowable Living Expense allowance category and amount.

For more information about the IRS Fresh Start Initiative you can visit the Fresh Start Homepage.

 

IRS Fresh Start Program Qualifications

Not all taxpayers are eligible to benefit from the IRS Fresh Start Program.  In addition, there are different qualification requirements for individual taxpayers and business taxpayers.

Specifically, if you are an individual taxpayer, you have to meet the following requirements for the IRS Fresh Start Program:

  • Your Federal tax filings are all up to date, including for the current taxable year.
  • You owe the IRS less than $50,000. If necessary, you can take action to reduce your IRS indebtedness to $50,000 before beginning the IRS Fresh Start Program.
  • This is your first time that you have ever fallen behind on any tax debt to the IRS.
  • You agree to a direct payment installment agreement. Under a direct payment installment agreement, you agree to pay the IRS the liability that you owe in a series of installment payments over an extended time period.
  • You will maintain the direct payment installment agreement, you will continue to stay up to date with all your tax filings, and you will not incur any additional tax debt to the IRS while you are making your installment payments under the direct payment installment agreement.
  • You will fully pay off your outstanding liability to the IRS in no more than 60 months.
  • You can also file for an Offer in Compromise (OIC) and be able to pay the OIC settlement amount within 12 months. Under an OIC, you “offer” to “compromise” your tax liabilities by paying a certain lesser settlement amount to discharge these liabilities.

Alternatively, if you are an owner of a business taxpayer, you have to meet the following requirements for the IRS Fresh Start Program:

  • Your business is up to date with all of its Federal tax filings and tax payments.
  • Your business owes the IRS less than $25,000.
  • This is the first time your business has ever fallen behind on any tax debt to the IRS.
  • Your business will fully pay off its outstanding liability to the IRS in no more than 34 months.

 

Applying for IRS Fresh Start Program

To apply for the IRS Fresh Start Program, you need to proceed by applying for a direct payment installment agreement.  You can complete this application in one of two ways – you can use the Online Payment Agreement tool at irs.gov, or, alternatively, you can complete IRS Form 9465, Installment Agreement Request. 

Whichever method you use to apply, applying under the IRS Fresh Start Program is a long and complicated process.  It is critical that you are represented by someone that has had significant experience and a successful track record with the IRS Fresh Start Program.  

The Hillhurst Tax Group has such significant experience and a successful track record with the IRS Fresh Start Program.  The Hillhurst Tax Group has helped many clients realize the tax benefits from the IRS Fresh Start Program.  

Located in Los Angeles right off of Los Feliz and the 5 Freeway, the aggressive representation of the Hillhurst Tax Group can help you obtain a favorable outcome under the IRS Fresh Start Program.  Please email at [email protected] or call (323) 486-3314 to schedule your free consultation with the Hillhurst Tax Group.