4 Fresh Start Program [ IRS and NYS ] Tax Tips

The IRS Fresh Start Program may help you resolve your federal tax liabilities. 

How can an individual or small business that has a tax problem get back on track? 

The program made important changes to their collection policies involving the offer in compromise and installment agreements; as well as some other programs.

This article addresses the most relevant questions we get on a daily basis as tax attorneys.

What is the Fresh Start Program?

The Fresh Start Program applies to both individual taxpayers and small businesses struggling with their tax liabilities. 

While you may hear commercials on the radio and television from these companies about the Fresh Start Program, you are probably wondering if it is for real?

First, it is not new. Regardless of what you hear on commercials or read on the internet, the IRS began the Fresh Start Program in 2011.

What is new is that the IRS has expanded the program several times to adopt more flexible terms that will enable taxpayers to more easily resolve their back taxes.

However, resolving a tax liability  is still far from easy but certainly more viable.

Fresh Start Criteria

To qualify for any federal tax relief program, including the Fresh Start Program,  the IRS is going to require you to comply with the tax laws. 

What does this mean?

If you have not filed your tax returns or if you have years of unfiled taxes, you will need to become current with your filing requirements before the IRS will consider settling your back taxes. 

If you are owing back taxes on a yearly basis and you are employed for a business, the IRS will want to ensure that your federal withholdings are correct.

If you are self employed, the IRS will require that you are current with your estimated tax payments for the tax year.

The reason why the IRS wants you to jump through these hoops is two-fold:

First, you are legally required to file your tax returns. 

Second, if the IRS is going to grant you tax relief, the government wants to ensure that you will not be in the same situation the following year.

If you have any questions or issues about filing your back tax returns or solving your tax problems, we can help guide you through the process as it is something that we do, day in and day out.

Offer in Compromise ( Fresh Start) 

The Offer in Compromise is a program that allows you to settle your tax liability for less than what you owe.

There are three (3) types of Offers : Doubt as to Collectability ; Doubt as to Liability; and Effective Tax Administration

Under the Fresh Start Program, the IRS made a change to the manner in which it calculated the Offer in Compromise  Doubt as to  Collectability.

A Doubt as to Collectability Offer is based on an assessment of a taxpayer’s assets and income to make a determination of the reasonable collection potential of the taxpayer before the expiration of the Statute of Limitations on the tax liability.

The IRS changed the following criteria to help more taxpayers possibly qualify:

1. Changing the manner in which the future income of the taxpayer was calculated ;

2. Allowing taxpayers to include student loans as an allowable expense;

3. Allowing taxpayers to include state and local tax liabilities as an allowable expense so long as the taxpayer is a valid installment agreement with their state;

4. Expanding the scope of some expenses

You may be a viable candidate for an Offer in Compromise.

However, here are seven things that you need to consider with regard to an Offer in Compromise before you apply:

1. Which Offer makes the most sense for you given your circumstances?

2. The most important part of the offer process is developing the correct strategy prior to submitting the offer. 

3. Failing to properly plan and implementing the wrong strategy can result in the offer either being denied or being accepted for a much higher amount.

4. Submitting the offer is just the first step. The offer will be reviewed to determine whether all the appropriate documentation has been submitted. It will then be assigned to an offer examiner who will contact your tax attorney in 6 to 12 months to scrutinize every part of the offer, line by line.  Your tax attorney will fight to get your offer accepted by the IRS.

5. You may have to Appeal the decision of the IRS, if it is not the correct decision under the federal tax laws.

6. The Offer process is complicated and you must know how to apply the tax laws.

7. In order to qualify for an Offer in Compromise, strict criteria applies on a case by case basis.

An experienced tax attorney can advise you as to which option, if any, makes the most sense for your situation.

Installment Agreement ( IRS Fresh Start)

The IRS expanded the terms of their installment agreements to allow taxpayers more flexibility in their payment options. 

Installment agreements are negotiable depending upon your individual circumstances.

Several different types of installment agreements are available: partial pay installment agreements; streamlined installment agreements; and direct debit installment agreements.

The IRS also expanded it’s payment plan options for businesses with payroll tax issues.

We can help negotiate the most appropriate payment plan so that you are safe from bank levies and wage garnishments.

Also, by helping you properly structure an agreement with the IRS, you are able to manage your cash flow as opposed to the federal government. 

It is important to ensure that the agreement was properly established by the IRS by pulling the tax transcripts to ensure that it was properly coded. 

Also, It is not uncommon for there to be issues with properly setting up the agreement with the IRS. Therefore, make sure that your tax professional guides you every step of the way.

Help with Your Fresh Start

If you want to discuss resolving your tax liability, the experienced tax attorney of the Tax Problem Law Center can help you. 

We helped taxpayers with such tax issues as: years of unfiled taxes; reducing tax liabilities through an offer in compromise; properly structuring payment plans ; and reducing penalties.

Every taxpayer’s situation is different so we welcome your call to see if we can be of assistance.