What To Know About the Fresh Start Initiative
The Fresh Start Initiative is not a single resolution strategy, like an Installment Agreement of Offer-in-Compromise. Rather, it’s a series of changes implemented by the IRS to provide back taxes help for taxpayers.
Originally launched in 2008 and updated in 2012, this tax relief assistance program was developed partly as a reaction to the economic conditions created by the financial crisis of the late 2000s. The IRS amended four specific areas of IRS collection procedures and practices — tax liens, penalties, installment agreements, and offers-in-compromise (OICs) — in order to add more tools to the taxpayer’s toolbox.
Navigating the changes brought about by the program can be a bit challenging to those without a background in taxation. Fortunately, the team at Boxelder Consulting is here to help.
We can show you how to take advantage of the Fresh Start tax relief program by cutting through the red tape and recommending the most advantageous tax strategies for you. Our team of licensed professionals have decades of combined experience successfully leveraging the Fresh Start tax initiative for thousands of individual clients and small businesses. Call today for immediate tax relief help or keep reading to learn more about Fresh Start.
Changes to Tax Liens & Tax Penalties
The Fresh Start Initiative improves conditions for taxpayers by raising the threshold for IRS tax liens from $5,000 to $10,000. This provides taxpayers with some essential breathing room, but it’s important to remember that the IRS can still take other action to collect — such as a wage garnishment — before the $10,000 threshold is reached
In addition to a higher threshold, the IRS has also offered greater access to lien relief. Upon request by taxpayers, liens can be removed once the full payment has been received. In some cases, taxpayers may be eligible for lien relief when they’ve made progress toward full payment. The IRS has also improved the turnaround time for review of lien relief requests.
The IRS can impose penalties for a whole range of infractions, such as failure to pay on time, failure to file on time, or having unfixed taxes. These penalties can be imposed for up to 40 percent of the total outstanding amount owed and can cause severe headaches for taxpayers attempting to pay back tax debt. However, through the Fresh Start tax relief program, taxpayers now have more access to forgiveness for these penalties.
- The Fresh Start Initiative increased the tax lien threshold from $5,000 to $10,000,
- it offers greater access to tax lien relief, and
- it provides relief from some tax penalties.
- Finally, the IRS can still initiate other collection actions prior to a debt of $10,000
Changes to Installment Agreements & OICs
In many cases, taxpayers are not able to repay their entire tax debt in a single, lump-sum payment. The Fresh Start Initiative provides relief in these cases by providing easier access to installment agreements.
Now, if an individual or business taxpayer owes no more than $50,000, that taxpayer can automatically qualify for an installment agreement. However, the timetable for the payment plan can not expand past 72 months, or six years.
The Initiative also makes changes to the offer-in-compromise (OIC) program. Now, the calculations used in the reasonable collection potential equation are more taxpayer-friendly. This means that more individuals will be able to utilize the OIC program, and the tax debts it satisfies can be repaid more quickly.
- The Fresh Start Initiative allows access to installment agreements for those who owe no more than $50,000
- The Installment agreement cannot last longer than 72 months.
- The Fresh Start tax program also makes adjustments to reasonable collection potential calculations that increase access to OIC relief.
The Fresh Start tax program provides many benefits to taxpayers who need relief from their tax debt. If you have back tax debt, you should contact the tax professionals at Boxelder Consulting for assistance. We can guide you through the details of the Fresh Start Initiative and help you pave the way toward a debt-free life.