IRS Fresh Start Program is the method that tax-payers resort to, when in substantial debt of the revenue system. This program allows the payer to pay significant amounts in its entirety without incurring penalties. Under this method, the rate of interest is also majorly reduced, which makes it affordable for the individual to pay back.
The program divides the revenue of the taxpayer into 6 parts to be covered in the course of 6 years. This one-sixth portion of the money is again divided in terms of monthly payments. The current income of the taxpayer, along with a detailed valuation of their liquid assets, is taken into account while calculating the payback.
The IRS Fresh Start Program generally simplifies the process of paying back heavy debts to the IRS. This results in the whole pay-off of tax debt at the end of the 6 year-term. Under this program, the individual can avoid massive interests or penalties involving the seizure of assets and wage garnishments.
This program was initiated in 2008 and further expanded to support individual taxpayers as well as business owners in 2012. The category of taxpayers that remain unemployed for a period of 30 days or more are eligible to have their penalties waived. In other cases, they can apply for a 6-month extension for penalty-free tax filing.
IRS Fresh Start Program Repayment Options
There are 3 repayment options that are available at all times, to all taxpayers that owe an amount of up to $50,000 to the IRS. All three methods are used to enable the individual to pay taxes without facing extreme financial drawbacks and penalties.
This is the first and the most common type of IRS Fresh Start Program to be filed. The category covers all taxpayers with a debt of $50,000 or less.
The payer is granted a period of 6 years to pay the amount without undergoing strenuous financial circumstances. Moreover, this halts IRS activities like the seizure of assets, penalties, wage garnishments and tax liens for the individual.
This is a rarer case scenario when it comes to paying off debts to the IRS. Offer in compromise allows the taxpayer to make an offer to settle the debt at a much lower amount than what he owes.
It is always suggested that you have a tax professional file your application in lieu of your current financial status. This is to ensure that your application is credible and is potentially processed faster.
The last and the most uncommon case is tax lien withdrawal, which is only available to people who agree to pay off their debt through a direct debit repayment option.
How to Apply for the IRS Fresh Start Program?
The IRS Fresh Start Program requires the taxpayer to follow a set of guidelines to be eligible for the application.
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File all the back and current tax returns
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File all outstanding tax returns
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File your future tax returns on time during the course
To get the tax repayment option of your choice, you need to enroll yourself in the Online Payment Agreement tool program at IRS.gov. With this tool, one can easily get their desired repayment options after filing their tax returns.
You can also join the IRS Fresh Start Program if you want to avoid enrollment online. For this, you need to fill and submit IRS Form 9465 that is available on IRS.gov. Getting into the repayment program of your wish can be a complex procedure. Hiring a tax professional will help you to sort between the information that you need to disclose or not, to simplify the process. IRS Fresh Start Program.