IRS Fresh Start ProgramIRS Fresh Start Program Orange County

The Internal Revenue System is a revenue service agency of the United States federal government. It oversees the enforcement of tax laws and the collection of taxes from around the states. It also performs the function of collecting tax debts from tax defaulters who avoid filing their taxes for more extended periods. The IRS has access to the social media, travel history, debit and credit transaction records of its defaults.

 

The IRS launched the IRS Fresh Start Program in 2011 to help people with taxes. This initiative was supposed to be enabling people to pay off their tax debts and make a new start with no liabilities in the eyes of the Internal Revenue System. It has been years since this program was introduced, yet people struggle with some basic questions regarding the same. If you have a significant amount of debt piling up and are struggling to pay back the same, this might be the right time to head to the IRS. Let’s answer it for them –

Can you buy a house if you owe the IRS?

If you fail to pay your debts off, the Internal Revenue Service has the power to seize your property and assets. However, there is still a high chance that you can buy a house when you owe the Internal Revenue System. The best thing to do would be to pay off your tax lien before you go ahead and apply for your house loan. This will increase your chances of buying your house. However, if you are not in the right financial state to pay off the entire debt, you must at least pay some parts of it to increase the chances of your home loan being approved.

 

You must always be transparent about your tax situation to your bank or your mortgage lender. Additionally, if you have made an effort in clearing out your loan debt, you can insist on getting a loan. All you need to do is make your finances stable to convince your lender or your bank.

How much do you have to owe the IRS to go to jail?

The clear answer is that you don’t have to worry about going to jail just because you lack enough money to pay off your tax debts. That’s why there is no specific amount that you have to owe to the Internal Revenue System, which will directly send you off to jail.

 

However, you can consider imprisonment if you failed to file your taxes or if you lied about your return. The inability to pay the taxes which you filed yourself is not a crime and will not be considered a criminal offense.

Does the IRS forgive tax debt?

To be honest, the Internal Revenue System is not likely to forgive tax debts. Especially if you have a source of income and you own some assets, you don’t stand a chance of being relieved of your tax debt. And even if they do, the price of that is going to be too heavy – a felony conviction, five years’ imprisonment, $250,000 fine, and the cost of prosecution. That’s why if you owe them, you need to take it seriously and do everything in your power to pay them off.

 

However, in the rarest of the rare cases, Form 656 comes into play and offers you a settlement in which you can pay off your tax debts for a lesser amount than you are supposed to. It’s not for everyone, though. You must meet the specific criteria of financial stress. For example, you met a severe disaster, and everything that you once owned is not yours anymore.

Who qualifies for the Fresh Start initiative?

It can be confusing to determine whether you qualify for the fresh start initiative or not because metaphorically, there are so many rooms under one roof, and there is a different eligibility criterion for each room. However, a few basic requirements are –

  • Proof of a 25 percent decrease in your net income if you’re a self-employed taxpayer.
  • A balance of less than 50,000 dollars at the end of the year.
  • The income of less than 100,000 dollars for single tax filers and less than 200,000 dollars for married couples who file jointly.

Will I be in trouble if my spouse owes back taxes?

It depends on the status of your marriage while your spouse had incurred the tax debts if you would be responsible for his or her debts. If your spouse owes back taxes to the IRS before you both got married, then it is solely his or her responsibility to pay off the taxes. It also depends on you both have filed for the taxes jointly. In the case of a joint file, both the participants are equally responsible for the repayment of the taxes.

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