The Fresh Start Initiative is a helpful program that offers tax help to persons who owe the IRS money. It was established in 2011 to lessen the harsh penalties the IRS imposes on delinquent back taxes.

This program represents the majority of taxpayers' greatest opportunity to resolve their tax issues. In fact, those who apply can have their taxes forgiven to the tune of more than 90%.

What criteria must a person meet to be eligible for the Fresh Start Program? How do you apply, more importantly?

Fresh Start Program Overview

The IRS Fresh Start Program was established to benefit those who were under water due to unpaid tax obligations. Interest begins to accrue when unpaid back taxes are not paid on time. The IRS may also impose federal tax liens, wage garnishments, and asset liquidation, depending on how serious the situation is.

The Fresh Start Program is not, despite its name, a program. Instead, it serves as a catch-all phrase for the various tax resolution programs the IRS provides. The IRS determines your reasonable collection potential (RCP for short) based on the taxpayer's capacity to pay their debt (as well as a few other variables). In other words, how much could you actually afford to pay the IRS?

Who qualifies for the IRS Fresh Start Program?

The Fresh Start Initiative's main principle is to stop the IRS from making people pay more taxes than they can afford to. For Americans who are caught between the IRS and financial hardship, they effectively serve as a backup plan.

Recent events have made it simpler than ever to be eligible for the Fresh Start Program. The government is more inclined than ever to accept a compromise from taxpayers in light of the contentious Inflation Reduction Act, which proposes to add 87,000 IRS agents to the agency, and the rising rate of inflation.

Taxpayers who are prepared to settle their tax obligation through payments paid over a set period of time and determined based on a repayment structure are eligible for the program. You must first owe the IRS at least $10,000 in unpaid taxes in order to be eligible for an IRS tax forgiveness program. The IRS will then want evidence that you lack the resources to make the required repayments in a timely manner.

Benefits of the Fresh Start Program

For those who owe taxes, the Fresh Start Program is a tremendous opportunity.

The Fresh Start Program has the following advantages:

• Help relieve financial stress for taxpayers.
• Gives taxpayers the opportunity to start over.
• Provides protection from the IRS.
• The IRS cannot take more from you than you can afford to pay.

These are the principal advantages of the Fresh Start Program, though there are plenty more as well!

How does the IRS Fresh Start program work?

We've already mentioned how the Fresh Start Program is actually a collection of programs rather than a single program.

Although a taxpayer (or a qualified advocacy group like Americans for Tax Help) may submit an application for a specific program, the IRS has the authority to deny a request. For the best chances of having their case approved, many people who are in need of back taxes choose to deal with an agency. A tax firm can also assist you in submitting an appeal if your request is turned down.

The three top Fresh Start Programs are discussed below.

Offer in Compromise (OIC)

An Offer in Compromise is a contract that enables the taxpayer to settle their tax bill for a lesser sum than they are fully owed. That seems really good, no?

Even though an OIC is the hardest program to qualify for, having a seasoned tax firm on your side greatly improves your chances of getting a compromise authorized.

Installment Agreement (IA)

Another name for a payment plan is an installment agreement, or just IA. Most taxpayers that the IRS determines are capable of paying off all of their debt are eligible for this program.

Depending on your needs and financial situation, there are both short- and long-term installment options available. The interest rates are typically lower since the IRS views the person as compliant. The news is wonderful for the tax payer!

The longest installment plan is 72 months long. Anything unpaid at the end of this period will be automatically forgiven if you pay on time.

Currently Non-Collectible Status (CNC)

A CNC can be the right program for you if you're going through a particularly difficult moment. If the CNC "program" is approved for you, the IRS stops all collection efforts. While in this status, the IRS won't send you any threatening letters, and you won't be subject to any collection actions like asset seizures or wage garnishments.

Although this status typically lasts between six months and two years, it will be reconsidered if your financial circumstances changes.

Remember that a CNC is less of a program than it is of a status. If you plan to handle your back taxes on your own, we highly advise speaking with a tax expert first. IRS pressure on struggling taxpayers is well-known.

To help you completely grasp your situation, Americans for Tax Help offers a free tax consultation.

How to Get Approved for the Fresh Start Program

Evidence is the primary requirement for eligibility for the Fresh Start Program. You must demonstrate that you are experiencing financial difficulties because the goal of the entire project is to aid suffering taxpayers. Documenting your challenges is the most effective approach to do this.

Medical records, insurance claims, death certificates of immediate family members, etc. are all reliable sources of proof.

You must also have these requirements as non-negotiables:

• Fill out all outstanding tax returns.
• Pay your projected taxes on time for the current tax year.

You must essentially demonstrate that settling your tax balance would put you in a serious financial bind.

The Takeaway

The process of filing back taxes can be difficult and frustrating, but it doesn't have to be. To get started right now, check out Americans for Tax Help's free tax consulting service!

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