IRS Relaxes Review of Tax Relief with Fresh Start Program

Did you know that the IRS recently implemented the Fresh Start Program which has relaxed the rules in regards to releasing an IRS tax lien, implementing an Installment Agreement, and negotiating tax relief through the Offer in Compromise Program:

For IRS tax liens, it used to be that once the IRS filed the lien, they would not consider releasing until the tax debt was paid in full. With the Fresh Start Program, the IRS will now consider the release of an IRS lien if a taxpayer negotiates a direct debit installment agreement and once 3 consecutive payments have been made. The IRS will only consider this for installment agreement where the balance due is under $50,000. Additionally, the IRS has increased the requirement of filing a federal tax lien to tax balances above $10,000. Therefore for taxpayers who owe less than $10,000 the IRS will normally not bother pursuing a lien. The IRS will also allow certain taxpayers to apply for withdrawal of lien if they meet certain payoff criteria and apply by filing the appropriate paperwork.

The IRS is now allowing taxpayers to negotiate installment agreements on tax balances up to $50,000 without the necessity to provide a full financial disclosure. This is an increase from the prior requirement that demanded financial disclosure once you owed over $25,000. Normally, the IRS will consider allowing the repayment of a balance up to $50,000 over 72 months as long as the taxpayer agrees to the payments being directly debited from their bank account. If a taxpayer would like to negotiate this type of an agreement they must complete form 9465 and mail to the IRS for review and acceptance.

The most significant alteration made by the Fresh Start Program is in the relaxing of the way an Offer in Compromise is reviewed. The Offer in Compromise program allows those taxpayers who cannot repay their outstanding tax debt the opportunity to settle for a fraction of what is owed. The IRS has revamped the calculating formulas used to determine a taxpayer’s “ability to pay.” This has drastically increased the number of taxpayers who qualify for tax relief. However, due to the complexity of preparing, submitting and negotiating an Offer very few qualifying taxpayers have taken advantage of this opportunity.

If you would like more information, have questions, or want to be represented in front of the IRS regarding a back tax issue, please contact Resolve Tax at 800-721-3890. I’m are here to help.