The IRS Fresh Start Program was introduced in 2011 to help individuals and businesses resolve their tax debts in a more manageable way. This program eases the burden on taxpayers by providing greater access to Installment Agreements, penalty abatements, and Offers in Compromise (OIC), which allow eligible taxpayers to settle their debts for less than the full amount owed. The Fresh Start Program also increases the thresholds for tax liens, making it less likely for the IRS to file a Notice of Federal Tax Lien on smaller debts.
Key components of the IRS Fresh Start Program include:
- Increased Thresholds for Liens: The IRS now only files tax liens for individuals owing more than $10,000 in unpaid taxes, compared to the previous $5,000 threshold.
- Streamlined Installment Agreements: Taxpayers who owe up to $50,000 can now apply for streamlined installment agreements without providing extensive financial documentation. These agreements allow taxpayers to pay off their tax debt in monthly payments over a set period, typically up to 72 months.
- Offer in Compromise: The Fresh Start Program made it easier for taxpayers to qualify for an OIC by simplifying the application process and expanding eligibility. With an OIC, taxpayers can settle their debt for less than the full amount owed based on their ability to pay.
- Penalty Relief: First-time penalty abatement is available under the Fresh Start Program for taxpayers who have a good compliance history but have fallen behind due to circumstances such as unemployment or a natural disaster.
The Fresh Start Program has helped many taxpayers avoid aggressive collection actions, such as levies and wage garnishments, by providing flexible options for repaying their debt or reducing it altogether.