What is the IRS Fresh Start Initiative?

Many taxpayers are inadvertently caught in the web of back taxes and tax debts for different reasons. Whether you were unable to meet up with the aggressive tax dues or somehow your taxes were wrongly computed, tax debts and penalties are a reality that many taxpayers face.

Thankfully, the IRS introduced the Fresh Start Initiative in 2011 to help small businesses, as well as individual taxpayers, settle their overdue tax liabilities.

The Fresh Start Initiative can be used to reassess tax debts. It also offers taxpayers the chance to pay their tax liabilities in manageable amounts without incurring additional penalties.

Changes to the Fresh Start Initiative

The IRS introduced changes in the Fresh Start Initiative to give struggling taxpayers flexibility with payment. Some of the notable amendments include:

  • Increasing the installment terms from a period of five to six years.
  • Increasing the installment threshold from $25,000 to $50,000. This applies only if the total tax debt can be cleared within a maximum of six years.
  • Allowing taxpayers to use a direct debit installment payment method to avoid tax liens. This applies to tax debts ranging from $25,000 to $50,000.

How the IRS Fresh Start Initiative Works

If you’re burdened with tax debt, the Fresh Start Initiative offers two tax debt settlement solutions to help you wriggle out of back taxes and penalties. These include:

  1. Offer in Compromise (OIC): Taxpayers who can’t pay their tax debt in full might qualify for the IRS Offer in Compromise. This initiative can reduce the amount of tax liability owed by the individual through a concession with the IRS. While many taxpayers may qualify for this tax debt settlement solution, negotiating the OIC can be tricky.
    Fortunately, with service from tax professionals at USA Tax Settlement, eligible taxpayers stand a better chance of approval.
  2. Installment Agreement: This solution allows the taxpayer to pay their tax debt using convenient monthly payment plans over a longer period. The agreement makes it easy for those owing taxes to gradually pay off their tax debt without incurring more levies or penalties.

Fresh Start Initiative Requirements

The following are some of the conditions that qualify taxpayers for this special tax penalty reprieve:

  • Individual’s tax balance has to be less than $50,000 at the year’s end
  • Married couples filing jointly should not earn above $200,000 per year, while singles can’t earn above $100,000 to qualify
  • If you are self-employed, you must provide evidence showing that your net income has dropped by at least 25%

Navigating all the qualification requirements can be overwhelming for many taxpayers and even confusing for some. If you are not sure about what to do, you can get in touch with the USA Tax Settlement team today. We have the expertise to help you determine your eligibility status.

Beyond qualifying for the Fresh Start Initiative, we can also help you figure out which course of action is best for your current financial situation.

Continuous Guidance from Our Tax Professionals

Tax laws are not static, which makes it difficult for many taxpayers to stay up to date with newer rules and regulations. Our tax professionals do not only stop at helping you negotiate a Fresh Start Initiative but they also offer continuing advice and guidance so that you can avoid getting into more tax debt. Besides, we can help you extend your deadlines and keep you informed about tax updates that might impact you.

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