If you struggle with tax debt, you must have seen or heard on the radio or television ads about the IRS Fresh Start Initiative. You may have wondered about how it can help you get out of tax debt and how you can qualify for the Initiative.
The IRS Fresh Start Initiative is not a novel concept: if you intentionally search for it on the IRS website, you wouldn't find anything new about the program. The Initiative started in 2011 with newly set rules for taxpayers owing taxes but didn't have federal tax liens against them.
The Fresh Start Initiative was crafted to offer taxpayers burdened with their first-time tax debts a second opportunity to get things right. The details of this Initiative include the following:
Making the process of getting FTL release easier; is when the debt is paid.
They are enabling ease with Installment Agreements (IAs) for small enterprises.
It is broadening the qualifications of the "Offer-In-Compromise" (OIC) program. This will make it seamless for taxpayers to qualify for the program and use it.
Increasing the dollar target will activate Federal Tax Liens, which is filed from an initial $5,000 - $10,000 to about $25,000 months later. These alterations will result in lesser FTLs getting filed.
They are collecting FTL more efficiently when you get into a DDIA.
The IRS extended its Fresh Start Initiative in 2012, thus making it accessible to additional taxpayers. The revisions entail:
Expanding the amounts and types of expenses includes allowable living expenses such as local tax debts, state tax debts, and student loans. The IRS will consider which cost is rational and appropriate when ascertaining the amount a taxpayer will pay on a monthly basis.
They are easing how the IRS computes a taxpayer's future income when making an allowance for an OIC.
The changes from 2012 saw the IRS take a common-sense view of a taxpayer's struggles to pay bills. Although the program is still based on precise methods, the IRS included real-time scenarios that make people stay behind with their taxes. So who is eligible for this Fresh Start Initiative?
Taxpayers who want to pay their debt over a period through installment agreements and a direct payment plan can qualify from the Fresh Start Initiative. They have to fulfill these criteria:
They must file an OIC and pay the stipulated settlement cost within 12 months.
If the taxpayer pays off the outstanding debt within sixty months or even less.
They must stick to the installment agreement and remain current with all tax filings. They also shouldn't incur new tax debts during this time of the installment agreement.
The taxpayer's tax filing must be updated with the current tax year.
The taxpayer should decide on a direct disbursement installment agreement.
If it is the taxpayer's first time falling behind on all tax payments with the IRS.
The taxpayer owes less than $50,000 or can pay a higher liability to that amount.
Take some time to consider these conditions. If you are eligible for the Initiative, then you will also gain access to certain bonus items such as:
If it’s your first-time as a tax debtor, you will be eligible to reduce individual penalties under the reviewed guidelines.
If the qualifying taxpayer owes below $25,000 or pays an initial liability below the amount, he may become eligible to withdraw a federal tax lien.
Businesses are not left out of the Fresh Start Initiative as the program is applicable if:
The enterprise owes below $25,000, which it can pay in 34 months
The venture has current federal tax procedures and updated payments.
It is the enterprise's first time being behind with tax payments.
The Fresh Start Initiative was set up to help you and your business get tax debt relief, but it has peculiar constraints hence why you are advised to work closely with a tax professional who will help you recognize if you qualify and maximize the scheme.
FOR MORE INFORMATION ON HOW DANIEL P. VIGILANTE, CPA & PROFIT CONSULTANTS CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
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