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Owing money to the IRS is not fun at all, especially when you are not sure how you are going to pay. The biggest problem in this situation is that you don’t really have a way to simply run from your problems. Sooner or later, the IRS will get a hold of you and ask you to pay your due amount. So, what can you do in this case? Well, fortunately, the IRS Fresh Start Initiative is here to save the day.

This is, in fact, a series of Fresh Start Programs that are meant to help taxpayers who are behind on their payments, regardless if they are individuals or small businesses. The bad news is that the eligibility requirements and the overall rules to be accepted for the IRS Fresh Start Initiative can be a little bit confusing for the average taxpayer. This is why, in this article, we will be explaining everything including how can the IRS Fresh Start Programs help you pay what you owe. Here we go!

What is the IRS Fresh Start Initiative?

The IRS Fresh Start Initiative was created back in 2011 to help taxpayers solve their tax problems. By resorting to these Fresh Start Programs, people can enjoy different types of tax relief but only if they meet all the necessary criteria, which we will cover shortly. The IRS Fresh Start Initiative offers multiple ways of clearing up your tax back taxes. This is precisely why it can be difficult for the average taxpayer to understand all of the steps that are required to enroll in such a program. A specialized attorney or tax relief company can be your best friend in this case.

What are the types of IRS Fresh Start Programs?

There are also multiple types of IRS Fresh Start Programs that you can resort to, depending on your particular situation. Some of those choices help you get rid of the penalties and fees accrued on your back taxes, some settle your back taxes for less than what you owe, while others can completely erase your back taxes. Here is a detailed look at the most important types of Fresh Start Programs that you can get and how each of them can help you.

Installment Agreements

In case you cannot pay your due amount on time, you can obtain an agreement with the IRS which allows you to benefit from an extended payment period. This is the best option to pick if you have the possibility to pay your taxes but just not within the established timeframe and you need an extension. Once you have been accepted for an installment agreement, the IRS cannot collect taxes from you anymore and cannot levy either. There are two types of installment agreements (or payment plans) that you can benefit from, depending on your particular situation:

·         Short-term payment plan: the online application for this is only meant for individuals, not businesses, and requires you to pay your taxes within less than 180 days. It won’t cost you anything regardless of the way you choose to apply for this type of IRS Fresh Start Initiative;

·         Long-term payment plan: in this case, if you choose to pay by automatic direct transfer from your checking account but you will pay a $31 setup fee for an online application and a $107 setup fee for e-mail, phone, or an in-person application. If you can prove that you are a low-income person, you won’t have to pay any fees. The other option is if you choose to pay monthly from your savings or checking account, by phone, online, money order, card, or check. In this case, the online application setup fee will be $130 and the mail, phone, and in-person application fee will be $225. In case you are a low-income person, you will have to pay a $43 setup fee which can later be waived.

Offer in compromise

This is also part of the IRS Fresh Start Initiative and allows taxpayers to pay less than what they actually owe because otherwise, they would end up in financial hardship. Obviously, in order to benefit from an offer in compromise, the IRS will thoroughly check all of your papers and your overall tax situation. Not everyone is eligible for this type of IRS Fresh Start Initiative. In fact, this is usually a second choice for people who do not qualify for any type of payment plan.

To find out whether or not you are eligible, you can fill out the online offer in compromise pre-qualifier questionnaire. As a beneficiary of the offer in compromise IRS Fresh Start Initiative, you need to pay your modified owed amount within two years. Keep in mind that if you are currently going through bankruptcy, you cannot even apply for an offer in compromise.

Currently non-collectible

This is a different type of tax relief because, unlike the other IRS Fresh Start Programs, it doesn’t help you with ways to pay your back taxes. This is simply a status that the IRS attributes to people who cannot pay what they owe. This does not erase your back taxes but only temporarily stops all types of tax collection until you can pay your back taxes. However, getting this status is not that easy and you will need to check all of the eligibility requirements. Also, this is only a temporary solution until you have a way to pay off your back taxes. The IRS can check your status at all times and decide whether or not you should start paying when they consider it possible.

Penalty Abatement

Last but not least, as part of the IRS Fresh Start Programs, penalty abatement can diminish penalties or wipe them out completely, depending on your situation. Requesting this type of IRS Fresh Start Initiative is completely free but the institution can only grant you a maximum of $100 to reduce your penalties.

General IRS Fresh Start Initiative eligibility requirements

In order to be eligible for any type of fresh start programs, you will need to fulfill some eligibility requirements. This is a general look at the most important of them:

·         You cannot have an income of over $100,000;

·         As joint taxpayers, you cannot have an income of over $200,000;

·         If you’re self-employed, your drop in net income should be 25%;

·         Your tax back taxes should be below $50,000 at the end of the tax year;

·         You must provide proof that the IRS cannot collect your total owed amount;

·         You must provide proof that paying your total owed amount will lead to financial hardship;

·         In case of a mistake from the IRS, you need to provide proof that you don’t owe what they claim and the amount may be reduced or erased.