If you’ve come across financial troubles that have impeded your ability to fulfill your tax obligations with the IRS, you might think you are without recourse. Believe it or not, however, the IRS understands that circumstances arise, and the agency is willing to work with you.
In the wake of the Great Recession in 2008, the IRS installed the Fresh Start Initiative, which allows those who are in danger of not being able to pay what they owe in taxes to make payments within six years. This guide will describe the basic concepts of the Fresh Start Program and how you might find tax relief from the IRS.
Types of Penalties the Fresh Start Program Helps You Avoid
When you first receive a late payment notice from the IRS, your instinct might be to block it out of your mind, but ignoring the problem won’t make it go away. If you don’t address the issue promptly, the IRS could take a variety of options to get back what you owe.
If you have property, the IRS is allowed to put a federal tax lien on it, meaning it has a claim on your assets. Further, the IRS could put a tax levy on your bank account to receive funds directly until your debt is paid or file for a wage garnishment from your paycheck.
This is all in addition to late penalties and interest accrued as you continue to let your debt with the IRS grow, which ultimately could lead to bankruptcy. Fortunately, the Fresh Start Program can save you from much of this.
Know Your Debt Relief Options
If you are late on a tax payment but have gotten to the point that you can afford to pay your debt along with fees and penalties, you can make a lump-sum payment to the IRS. Alternatively, if you don’t have the money to pay now but believe you could catch up over time, you can work out an installment agreement to pay back what you owe with a short-term or long-term settlement.
If your troubles go beyond these simpler methods, your last-ditch effort would come in the form of an Offer in Compromise, through which you can apply to have your debts reduced and payments made in a way in which the IRS agrees you could reasonably afford to pay over time.
How to Qualify for Fresh Start Program Options
To qualify for Fresh Start, you must be able to prove you can’t pay your debt yet still file all your tax returns. If you decide to apply for one of the Fresh Start Program’s alternative tax collection methods, you might want to seek help from a professional tax consultant or a certified public accountant.
Depending on the option you choose, you will either need to make a lump-sum payment, apply for an installment plan online, or contact the IRS to walk you through the process of an Offer in Compromise. Any of these options will help you get the best debt relief, as long as you make sure you seek trustworthy professional help and avoid scammers who promise more than they can deliver.
