The Ultimate Guide To The Fresh Start Program: What Is It And Why Does It Exist?

The Fresh Start Program is a useful program that provides tax relief to taxpayers who owe money to the IRS. Created in 2011, it exists to help relieve the severe penalties the IRS puts on unpaid back taxes. 

For most taxpayers, this relief initiative is their best shot at tax resolution. In fact, those who apply could get more than 90% of their taxes forgiven.

So, what are the Fresh Start Program eligibility requirements? And, more importantly, how do you apply?

Fresh Start Program Overview

The IRS Fresh Start Program was created to help people drowning in unpaid tax debt. When back taxes aren’t paid on time, interest starts accruing. Additionally, depending on how severe the situation is, the IRS can also impose federal tax liens, wage garnishments, and asset liquidation.
Despite its name, the Fresh Start Program isn’t a program. Rather, it’s an umbrella term for multiple tax resolution programs the IRS offers. Depending on the taxpayer’s ability to pay off their debt (and a few other factors), the IRS calculates your reasonable collection potential (RCP). In other words, how much could you reasonably pay the IRS?

Why Was The Fresh Start Program Invented?

The main principle of the Fresh Start Initiative is to prohibit the IRS from forcing citizens to pay more taxes than they could reasonably pay. They essentially are a backup plan for Americans who get caught between the IRS and financial hardship. 
Due to current events, it’s easier than ever to qualify for the Fresh Start Program. With the controversial Inflation Reduction Act, which plans to add 87,000 IRS agents to the agency, along with inflation on the rise, the government is more likely than ever to accept a compromise from taxpayers.

Benefits Of The Fresh Start Program

The Fresh Start Program is an enormous opportunity for those in tax debt.
Here are some benefits of the Fresh Start Program:

  • Help relieve financial stress for the taxpayer
  • Allows taxpayers the opportunity to start over (provides an attainable way to pay off tax debt)
  • Provides protection from the IRS (the IRS can’t take more than you can reasonably pay)
Though there are many more, these are the main benefits of the Fresh Start Program!

3 Main Fresh Start Programs

We already talked about how the Fresh Start Program isn’t a program in of itself, but rather a collection of programs. 
Though the taxpayer (or a professional tax agency like TaxRise) can apply for a particular program, the IRS has the power to reject a request. This is why many struggling with back taxes choose to work with an agency to have the best possible odds of their request being approved. And, even if your request is denied, a tax relief company can help you file an appeal.
Below, we will talk about the 3 best Fresh Start Programs.

Offer In Compromise (OIC)

An OIC is an agreement that allows the taxpayer to resolve their tax debt for less than the full amount they owe. Sounds pretty good, right?
Though this is the hardest program to get approved for, your chances of getting a compromise approved increase drastically if you have an experienced tax relief company on your side.

Installment Agreement (IA)

An installment agreement, or simply IA, is another term for a payment plan. This program is mainly reserved for taxpayers whom the IRS deems able to pay off all their debt.
There are short-term and long-term installment plans based on your needs and ability to pay. Since the IRS deems the taxpayer as compliant, the interest rates are usually lower. This is fantastic news for the taxpayer!
The maximum installment plan length is 72 months. If you pay on time for this period, then anything left over will automatically be forgiven. 

Currently Non-Collectible Status (CNC)

For those going through a very tough time, a CNC may just be the program for you. If you’re approved for the CNC “program”, the IRS halts all collection activity. You will not receive any threatening letters from the IRS while in this status and you will be protected from all collection activities like wage garnishments or levies of your assets. 
Though this status generally lasts between 6 months and 2 years, if your financial situation changes, then your status will be reviewed.
Keep in mind that a CNC is more of a status than an actual program. If you’re going to fight back taxes by yourself, we strongly suggest you consult with a tax professional first. The IRS is renowned for pressuring struggling taxpayers to accept unjust terms. 
TaxRise offers a free tax consultation so that you fully understand your situation.

How To Qualify For The Fresh Start Program

In order to qualify for the Fresh Start Program, you need one main thing: evidence. Since this whole initiative is meant to help struggling taxpayers, you must prove that you’re having financial difficulties. The best way to do this is to provide documentation of your struggles.
Good sources of evidence are medical records, insurance claims, death certificates of close family members, etc.
Additionally, you must have these non-negotiables as well:

  • File all missing or unfiled tax returns
  • Be current on estimated tax payments for the current tax year
Essentially, you need to prove that paying your tax balance would cause significant financial hardship.

The Takeaway

Back taxes are a stressful and complicated process — but they don’t have to be. Check out TaxRise’s free tax consultation to start making progress today!
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