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What’s the Fresh Start Program from the IRS? A Simple Guide

fresh start - debt to the irsAre you trying to figure out what the fresh start program is from the IRS and how it works? Read this article to learn what you need to know.

What’s the Fresh Start Program from the IRS? A Simple Guide

There are few things as stressful as owing seismic amounts of money to the IRS. Not only are the potential interest payments and penalty fees intimidating, but the potential legal repercussions as well. 

However, what you might not know is that there’s a program available to get around this problem. This program is known as the Fresh Start Program. It allows individuals to pay off their tax debt over the course of several years. 

Looking to learn more about this program? This guide has you covered. 

Related: $22,000 in Taxes?? Ugh. We’re Never Doing This Again!

Understanding the IRS Fresh Start Program

If you don’t have the money to pay your tax bill, there’s no better option than to enroll in the Fresh Start Program. This program allows you to pay off your bill over the course of 6 years, all the while negating interest, fees, and wage garnishment.

When enrolled in this program, you make payments to the IRS monthly. These payments are based on your income as well as your liquid assets. So, the more income and assets you have, the higher your monthly payment will be. 

There are two general qualifications that you need in order to enroll in the Fresh Start Program:

  • First, you must owe no more than $50,000 to the IRS;
  • Second, you must earn no more than $100,000 a year as a single filer and no more than $200,000 a year as a married couple.

If you’re self-employed, you must be able to show that your income has decreased by at least 25%. 

If you meet these qualifications, you’re allowed to sign up for the program. This is true whether you’re an individual or a business owner.

When applying, you have three different payment options to choose from. We’ll discuss the specifics of each below. 

1) Extended Installment Agreement

The most commonly used payment option is known as an extended installment agreement. This is a form of payment wherein the payer has up to 6 years in which to pay off the debt in full. Those who utilize this option make payments monthly; These payments are generally the same every month. 

There are tons of advantages to extended installment agreements.

  • Not only do they prevent the accumulation of interest, but they also…
  • nix fees, wage garnishment, asset seizure, and tax liens. 

2) Offer in Compromise

Though not nearly as common as extended installment agreements, offers in compromise do occur. These are situations in which individuals settle with the IRS, agreeing to pay less than what they actually owe. 

Sounds great, doesn’t it? Sure. But, as you might imagine, it comes with a few caveats. 

See, most individuals aren’t qualified to submit an offer in compromise. In order to do so, you must prove that you’re in a state of financial hardship. 

To assess financial hardship, the IRS inspects a variety of conditions.

These include:

  • income,
  • assets,
  • expenses

If, after assessing these conditions, the IRS determines you’re not able to make full monthly payments, they will reduce your monthly payment, effectively allowing you pay off your tax debt at a fraction of the price. 

Note, if you want to take advantage of an offer in compromise, you need to submit it. When doing this, you need to make a reasonable offer on monthly payments. If your offer is unrealistic, it won’t be accepted and you’ll be back to square one. If it is accepted, you can commence with the process. 

As such, when applying, you need to take great care in assessing your financial situation. It might even be a good idea to hire a tax attorney. 

3) Tax Lien Withdrawal 

Your last payment option is tax lien withdrawal. This is an agreement wherein the IRS withdraws your tax lien in exchange for you making monthly payments through direct deposit. It ensures that payment is being made in full every month, all the while eliminating interest and fees.   

Related: 7 Ways to Settle Tax Debt

How to Sign Up for the Fresh Start Program

Interested in enrolling in the Fresh Start Program? We’re going to show you how below. 

Get Your Tax Info Ready

First and foremost, you’re going to need to locate your tax info from past years. This info will be vital in helping you to plead your case and will also assist in determining your current tax standing. 

Hire a Tax Lawyer

The IRS is one of the most powerful organizations in the United States. Owing money to the IRS leaves you legally vulnerable. As such, before applying for the program, you need to hire an experienced tax lawyer. 

He or she will look over your tax documents and discuss your current situation with you, helping to build a proper case. While you’ll have to pay extra money to utilize the services of a lawyer, it will be massively beneficial in the long run. 

Send in the Proper Documentation

With the help of your lawyer, you’ll want to gather and send in the proper documentation and applications. These entities will include everything from bank statements to tax returns to government forms and more. Make sure to send them both electronically and via mail. 

Meet With the IRS

Once your documentation has been received, the IRS will assign you a caseworker. He or she will discuss your situation with you and your lawyer, giving you the chance to strike a deal regarding payment of your debt. 

This is a serious business. Come as prepared as possible. 

Make Payments Religiously

Once you’ve struck a deal with the IRS, you need to hold up your end of the bargain. Make payments religiously, proving that you’re trustworthy and that you’re good for the money that was promised. 

The Fresh Start Program Can Make A Huge Difference

If you owe substantial amounts of money to the IRS, you may want to consider taking advantage of the Fresh Start Program. Not only does it allow you to pay off your tax debt over a period of several years, but it also protects you from hefty interest and fees.

Do you owe the IRS a substantial amount of funds? What’s your plan to pay your tax bill?


AUTHOR LaTia Longuemire

My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.

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