The IRS Fresh Start Program is a real program announced by the IRS. In this article we will answers some of the common questions taxpayers routinely ask, and find out if the IRS is really "on your side".
What are the IRS Fresh Start Programs?
IRS Fresh Start Lien Program
The first IRS Fresh Start Program is the IRS Fresh Start Federal Tax Lien program. The IRS claims it is doing taxpayers a favor by increasing the threshold of tax lien filing from $5,000 to $10,000. Sounds great, right? Well, in reality this is pretty useless. Tax liens against people who don't have much money don't really secure anything for the IRS. All it does is lower their credit score by 100 points while making it even harder for them to repay their debt. The IRS has filed liens even when it costs the government more money to file the lien than it could possibly collect; really, there's very little sense to it.
IRS Fresh Start Installment Agreements
Generally, if you owe less than $50,000 to the IRS, you can get into a repayment agreement by providing minimal financial information (if that number is under $25,000, you do not need to provide anything), and if you are able to fully repay the debt in five years, you can then request a lien be withdrawn. Also, if you owe more than $50,000 then you will have to get into onerous negotiations with the IRS over a reasonable repayment amount. These negotiations are so tedious that people actually have to hire representation so that the IRS doesn't leave them penniless.
IRS Fresh Start Offer in Compromise
This is actually the most helpful IRS Fresh Start program (of course, ignore their nonsense offer in compromise pre-qualifier, as it is garbage). So helpful, I actually wonder how much longer it will last. Basically, this is how this IRS Fresh Start program works: the IRS changed reasonable collection potential calculations from multiplying your discretionary income by 60 down to 24 (when doing a period payment OIC). Essentially, it could have the following effect: in a case where your offer in compromise amount would have been $6,000 under the old rules, it could be $2,400 instead.
If you need assistance figuring out which option is the best for you, contact us for a free consultation.