IRS Fresh Start Program

IRS Fresh Start Program (Is it Really Beneficial or Not in 2021)

Who makes the greatest ever detective- Sherlock Holmes, Harry Bosch, Sam Spade, or the International revenue system (known as IRS)? The answer is IRS because it finds more deductions!

IRS Fresh Start Program

There is no wonder that none of us consider the IRS our best friend. Still, today I will give you a reason to stop hating the “taxman” of the US. Have a look!

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What is the IRS (Internal Revenue Service)? How does it work?

IRS is a US government agency responsible for collecting taxes and enforcement of tax laws. It is sometimes called the “taxman” in the US, and rightfully so.

Fresh start initiative

Established in 1862, IRS is an organization that works under the United States Department of Treasury. It collects income and other taxes from US citizens and organizations in the US. Any form of income is taxable. 

For example: If an individual owns a piece of land or property from which he or she collects rent, it is taxable. If an organization owns a building or has received a piece of land as a gift, it is taxable. 

In the US, citizens have to pay their income taxes manually. Unlike in India (TDS) or the UK PAYE(Pay-as-you-earn), taxes are not deducted before making payments (salaries, incentives, allowances, bonuses, etc.). 

Citizens of the US also have the option to pay their taxes online via the e-file option. In 2018, 89% of US citizens paid their taxes via the e-file system.

what is the irs fresh start program

Realizing the citizens’ anger against penalizing over non-payment or late payment of tax, the IRS has taken a fresh start initiative. The IRS has recently come up with an ‘IRS Fresh Start Program’ program to encourage citizens to pay their taxes honestly.

Now, what is the IRS fresh start program?

The IRS Fresh Start Program is an amendment or IRS tax collection procedures and policies. Formulated in 2008, the IRS underwent a few revisions in 2012 and has been highly productive.

Under this program, if a US citizen has been unemployed for over a month and has not paid taxes, penalty interest rates are not imposed. Those citizens can resume payment of taxes as when he or she finds a new job. 

The IRS fresh start program has brought relief to US citizens and has been highly welcomed there. During 2018, around 141 million people in the US paid their taxes, which resulted in the IRS collecting the whopping US $3.3 trillion in revenue. It also, quite honestly, refunded the US $282 billion in tax refunds! 

The major tax payment plans amended under the IRS Fresh Start Program were Installment Agreement and the Offer in Compromise plans.


What does the IRS fresh start program offer? Is it really beneficial?

Until recently, the IRS has penalized late taxpayers and tax evaders by imposing month-on-month tax interests. If a citizen does not pay tax on any month’s beginning, he/she has to spend two months’ fees plus the penalty interest rate for the month.

irs fresh start initiative

If a citizen was evading taxes for more than six months, he or she was given life imprisonment.

Under this program, people with high tax debts can choose to pay their tax debt in monthly installments rather than as a whole amount. 

You can negotiate the amount to be paid each month with the IRS. Citizens generally consult with lawyers to negotiate the amount to be paid; however, the IRS is the deciding authority that fixes the amount paid each month. Citizens also consult with lawyers to check if they are eligible for the IRS’s Fresh Start Program.

There are many monthly payment methods under the IRS’s Fresh Start Program. They include: a streamlined installment agreement, partial-pay installment agreements, stair-step installment agreement, etc.

irs fresh start initiative

Generally, when proposing a monthly payment plan, citizens take their essential (minimal) monthly expenses into account. Citizens must also offer a sizable monthly payment of taxes for the IRS to approve their monthly payment plan. 

Taxpayers subscribed for their taxes’ monthly payment must never default on their debt, even for a month. Otherwise, they’ll be prisoners in jail for 14 years.

Is the IRS fresh start program beneficial? Let me explain both pros and cons.

Subscribing for a monthly tax payment option does come with a fee, but this fee varies according to tax payment methods. One can choose to pay taxes online, pay via money order, pay via cheque, pay via credit or debit card, or pay by calling the helpline number. 

Online payments or card payments have lesser subscription fees when compared to cheque payments or money order payments.

If a person with more than $50,000 in tax debts in the US, they must submit Form 433-F and Form 9465 to the IRS. Moreover, you can only make tax payments via cheques or money orders. Online fees or card payments do not apply to a person with more than US $50,000 in tax debts.

Related to this: Business Tax Crimes You Must Avoid At All Costs


What is a Trust Fund Express Instalment Agreement?

It is not only individuals but also small enterprises (startups) that default on tax payments. The IRS has a tax collection system in place for them too.

IRS Fresh Start Program

For startups that owe less than the US $25,000 in tax debts, there is a tax collection system called Trust Fund Express installment. The startup must have at least 20 employees to qualify for that scheme.

Under this plan, the startup can pay off its tax debts in 34 months. You can negotiate the amount to be paid each month with the IRS, but again it’s the deciding authority that fixes the monthly payment.

Like US citizens, US-based startups cannot default on monthly tax payments. If they do, monthly penalty interest rates will apply, or the monthly payment agreement revoked altogether.

If startups continue to default on monthly tax payments for long periods, they will be shut down and deemed illegal by the US government.


What is a Streamlined Installment Agreement?

In many cases, taxpayers who qualify for guaranteed agreements are also eligible for a streamlined installment agreement. The following requirements must be necessary to qualify fully:

Fresh start initiative

  1. Tax liability, penalties, or interest should not exceed $50,000
  2. The balance must be paid off within 72 months.
  3. The payment must be equal to or greater than “minimum acceptable payment.”

Although, the taxpayer has to pay a fee for the Installment agreement. 


Who qualifies for IRS fresh start initiative? And how do I negotiate with the IRS?

Let’s check out what are the criteria to qualify for the IRS fresh start initiative. IRF fresh start programs will be beneficial for an individual taxpayer when:

  1. They have debt less than 50000 dollars or compensate for an ample liability according to that amount.
  2. They can pay off the residual amount of whet within sixty months.
  3. When the individual taxpayer fails to pay the taxation for the first time, he/she becomes eligible.
  4. The person agrees to the direct payment installment contract.
  5. The individual owns an up-to-date taxation record per the recent taxation annum.
  6. Suppose he/she upholds the installment contract rightly and doesn’t incur any more taxation debt within the period when the installment contract is valid. In that case, the individual taxpayer may benefit from the IRS fresh start program.
  7. He/she conducts an OIC and pays the amount of agreed settlement in 1 year or less.

Nowadays, IRS agents are willing to comply with late taxation pay-offs. Installment agreement plays a fundamental role here. Nonetheless, what are the ways for negotiating with the IRS fresh start program? Let’s find out!

irs fresh start initiative

  1. Conduct an installment agreement. You should plan the payment structure first. Acknowledge the officers who take IRS fresh start initiatives that you will pay the remaining debt within a particular time without fail.
  2. The IRS fresh start program sets up the payment charge as per the period you are taking to pay the debt, so you have to stick to the pay-offs.
  3. You may get hold of a professional taxation representative. He/she is the best person to guide you on setting up the most beneficial installment agreement.
  4. IRS fresh start initiatives usually offer bulk help to taxpayers’ strugglers. On the other hand, the tardy payee should do his/her bit, too. When the individual taxpayer fails to pay the owing lend in one lump-sum, filing his/her returns is mandatory right then.
  5. Moreover, you can request the International revenue system agency to detain the tax collection for a relatively brief period until your financial condition worsens.

Also read: Ultimate Guide on How to Become a Successful Life Coach. Start your Career in Coaching


Can you get the IRS to forgive your tax debt? If yes, how?

Life happens, and it is obvious. Humans can’t resist the unpredictable mishaps that life throws at them. The International revenue system agency does understand this.

 Because of that, the IRS provides a debt forgiveness offer when the tardy taxpayer fails to pay the owing tax. The IRS forgives the charge to a certain extent under some specific circumstances. Let’s understand which factors does the IRS fresh start initiatives consider when it comes to forgiving tax.

  • At first, they will look at your current economic situation. The IRS agents won’t charge you an amount as a tax that is larger than your affordability.
  • The IRS never asks any individual taxpayer to pay back taxes when they are already in a severe financial problem. They will never push you towards losing all sense of monetary indemnity.
  • When you apply for the IRS fresh start program’s debt forgiveness facility, you should figure out how much you owe. You can check it online on the IRS’s portal. You can mail or call the IRS to ask a tax professional for help regarding it.
  • Now you should apply for an Offer in Compromise form (OIC) to clear the residual debt.
  • After analyzing your financial capability, the IRS eloquently diminishes the payable amount of tax debt.

Our readers’ choice: Have such kind of hobbies which can make money work for you for the rest of your life.


A complete guide on IRS fresh start program

Anyone can bump onto the IRS tax debt. Still, the IRS fresh start initiatives can reduce the taxpayers’ tension for sure. Therefore, you should know how to deal with the pile of your tax debt by availing the IRS fresh start program’s facilities.

IRS Fresh Start Program

How to apply for the IRS fresh start initiative?

Let me make it clear, and this program doesn’t have particular eligibility criteria to take advantage of it. It would be best if you accomplished the following deeds.

  1. File all remarkable taxation revenues.
  2. Settle up the payment agreement that is convenient for both your and IRS agents.
  3. Show your comprehensive monetary information if requested.
  4. When you complete all three deeds, three tax issues, such as Offers in compromise, installment payments, and tax liens, may help you out.

Also read: 5 Real Estate Opportunities in 2020 – Some deep insights and secrets

The work process of the IRS fresh start program:

This fresh start initiative doesn’t mean a singular form. It notably works as a tax relaxation toolbox. Many measures exist in the toolbox planned to help the tardy hundreds of thousands of tardy taxpayers.

This toolbox provides you four primary prerequisites such as,

  • Penalty relief
  • Tax lien avoidance
  • Installment agreement
  • Offers in compromise (OIC)


How can the Fresh Start Initiative help you?

If you are a US citizen and have defaulted on tax payments before, this is a golden opportunity for you to make amends and wipe your slate clean. Keep your personal and professional records clean for a bright and shiny future, in both cases, business or employment.

Like US citizens, US-based startups cannot default on monthly tax payments. If they do, monthly penalty interest rates will apply, or the monthly payment agreement revoked altogether.

If startups continue to default on monthly tax payments for long periods, they would be shut down and deemed illegal by the US government, but this IRS fresh start program saves their businesses.


What do people think about this program? According to the internet research and people’s review

Here is what people talk about IRS fresh start program- 

irs fresh start programfresh start initiative

Final Thoughts

The stipulations of the IRS fresh start program exhort direct deliberation with the revenue system. You may easily benefit from this fresh start initiative by applying for the debt forgiveness program. The tax professionals can guide you to get the best outcome out of it.

Moreover, it may sound crazy, but taxes are a source of income for any government, just like your salary. Please pay your taxes honestly to keep your government running smoothly and avoid any tax penalties, whether you are an entrepreneur or a salaried worker.


People also ask

1. How do I negotiate with the IRS?

In that case, you have two options. Either you can negotiate an installment agreement with the IRS or ask the agency to let you avail of the benefits of OIC.

2. Is there one-time tax forgiveness?

No. There is no debt forgiveness program for you right away. If you meet a critical financial issue, then the IRS officials may consider wiping your tax slate.

3. Do tax relief companies work?

Yes, the tax relief organizations help lessen their customers’ tax debt and guide them on audits to negotiate the payments.

4. How do I get my IRS debt forgiven?

To resolve the remaining amount you can apply for the payment plan called Offer in Compromise (OIC). This helps in reducing your total debt depending on your financial stability.

5. How much will the IRS settle for?

The average amount is $6,629 to settle an offer in compromise.

6. Does the IRS forgive tax debt after 10 years?

The IRS only has 10 years to collect unpaid tax, after that, it enters the statute of limitation where the debt is written off.

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