May 22, 2015

Since its inception in 2011, the IRS Fresh Start Initiative has changed to meet the needs of taxpayers.  Its scope has expanded in several ways to cushion the blow of back taxes and penalties.

●        Taxpayers unable to pay their entire federal tax bills can apply for an Offer in Compromise (“OIC”) to reduce their tax burdens.  Essentially, the OIC allows taxpayers to settle their delinquent federal tax bills for less than the full amount that they owe. An OIC also streamlines the process of investigations and shortens the time that taxpayers spend repaying the IRS.  Taxpayers with complicated tax returns should employ the assistance of a  tax relief professional to negotiate a fair OIC agreement.

fresh start●        Taxpayers who do not qualify for an OIC can negotiate manageable monthly payments through an IRS installment agreement. Previously, taxpayers who owed more than $25,000 in back taxes were subject to an invasive income examination process to determine the amount of their monthly payments. The IRS Fresh Start Initiative has raised that limit to $50,000, making it possible for more taxpayers to negotiate a streamlined installment agreement. However, taxpayers owing less than $50,000 may still wish to consult with a financial professional to ensure that a prospective installment agreement is mutually beneficial, not just for the IRS.

●        One method the government uses to recover back taxes and penalties is the filing of liens against taxpayers’ property.  This could mean real estate, business assets, and vehicles.  A tax lien against property can make it difficult to get credit and can also result in  property being auctioned off.  Originally, tax liens would be filed automatically for taxpayers with delinquent federal taxes of at least $10,000.  The IRS Fresh Start Initiative has raised the lien-triggering amount to $50,000, although the IRS still has the latitude to file liens for taxpayers who owe less.

The IRS Fresh Start Initiative was introduced as a way to make it easier for taxpayers to compromise with the government when paying back taxes and penalties.  The changes made to the program since 2011 help the taxpayer settle disputes quickly, avoid inconveniences, and save money.