The Internal Revenue Service (IRS) offers the IRS Fresh Start Initiative, which is a program that can help taxpayers who owe money to the IRS. The program allows taxpayers who are in certain financial situations to have part of their balance forgiven. This program helps those who can’t pay more than the IRS can collect. Essentially, the IRS can’t collect more taxes than a taxpayer can pay.

Offer in Compromise

Taxpayers who don’t have the means to pay their full federal tax bill can apply for an IRS payment plan called an Offer in Compromise (OIC) to clear up their remaining balance. The IRS takes into account the ability of the taxpayer to pay and the OIC can significantly reduce the amount the taxpayer owes. Once the OIC is in place, the reduced amount can be paid in monthly installments or as one lump sum.

Qualification requirements to get an OIC are strict, and not all taxpayers can qualify. Although companies can help with filing the forms, the IRS is the only entity that has authority approve an OIC.

Do You Qualify for the IRS Fresh Start Initiative?

Qualified applicants for the IRS Fresh Start Initiative who want their balance reduced or to have a lien withdrawn must start by doing a couple of things. Prior to applying, all missing tax returns need to be filed. Second, the IRS generally requires the taxpayer be current with estimated tax payments and that current withholdings are correct and have been for the prior six months.

Applying for an IRS Tax Relief Program

In order to better accommodate taxpayers so they can qualify for tax relief programs, the IRS expanded the Fresh Start Initiative. The new, more flexible, IRS rules mean a taxpayer does not have to disclose any extensive financial details in order to qualify for their ability to pay. The Fresh Start Initiative gives taxpayers options on how they pay their tax balance, which include:

  • Tax Liens – The Fresh Start program increased the amount a taxpayer can owe to $10,000 before the IRS will file a Notice of Federal Tax Lien. In some cases, the IRS can still file a lien notice on amounts lower than that.
  • Installment Agreements – For taxpayers who can’t pay their delinquent federal taxes in one lump sum, they may qualify for an installment agreement where they pay monthly.
  • Offers in Compromise (OIC) – An Offer in Compromise (OIC) allows a taxpayer to settle their IRS balance for less than what they owe. The Fresh Start Initiative extended and updated the OIC program. IRS agents now have more flexibility when examining a taxpayer’s ability to pay. This program means the OIC is available to a wider group of taxpayers.